Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

NEW WRIT.

For the County of Surrey (Mitcham Division), in the room of Sir Richard James Meller, deceased.—(Captain Margesson.)

Oral Answers to Questions — EMPLOYMENT EXCHANGE, RISHTON.

Mr. Tomlinson: asked the Minister of Labour whether he will consider the reopening of the Rishton Employment Exchange in view of the changed circumstances since the decision was made to close it?

The Minister of Labour (Mr. Ernest Bevin): I am not aware of any change in circumstances which would justify the reopening of the office at Rishton. The number of unemployed persons there has declined still further since the office was closed in May, 1940.

Mr. Tomlinson: Will the right hon. Gentleman keep in mind the requirements of the district in view of the developments which are taking place?

Mr. Bevin: If any change arises, perhaps my hon. Friend will let we know.

Oral Answers to Questions — NATIONAL WAR EFFORT.

TRANSFERRED WORKERS.

Mr. Tomlinson: asked the Minister of Labour whether the arrangement to pay travelling expenses applies in all cases where men have been compelled to leave their occupation and take up more urgent duties, and are called upon to travel in consequence; and, if not, what are the conditions under which these expenses are paid?

Mr. Bevin: Broadly speaking, workers who are transferred by my Department beyond daily travelling distance to work of urgent national importance are entitled to travelling expenses, but the exact arrangements are not the same in all industries. If my hon. Friend has any particular case of difficulty in mind, perhaps he will send me particulars.

Mr. Tomlinson: Do I understand that an individual who is called upon to travel daily does not qualify?

Mr. Bevin: No, Sir.

Mr. Tomlinson: Will the Minister look into the unfairness of such an arrangement, in view of the demand of his Department that men should change their occupation, and in some instances work at a lower wage, and might be called upon to pay several shillings a day travelling expenses?

Mr. Bevin: Perhaps my hon. Friend will put that Question on the Paper.

Mr. Kenneth Lindsay: asked the Minister of Labour how many persons have recently been transferred from other industries to those directly related to war production?

Mr. Bevin: I regret that it would not be in the public interest to publish statistics which would indicate the growth of production for war purposes.

CENTRAL REGISTER.

Mr. Edmund Harvey: asked the Minister of Labour whether the Central Register can be expanded to comprise scientists and technicians of lower qualifications than those now included, whose services are now frequently needed for work of a more routine nature?

Mr. Bevin: The standard of qualification required for the Central Register is kept under review by the Advisory Committees, representative of the sciences and the professions, with whose assistance the Central Register is operated. Scientists and technicians who are not in employment, and whose qualifications fall below this standard, are included in the supplementary registers which deal with vacancies of the kind to which my hon. Friend refers.

Mr. Harvey: Have there been any recent changes in the qualifications?

Mr. Bevin: No, Sir.

Mr. Robert Gibson: How many scientists and technicians have been placed?

Mr. Bevin: I cannot give the figures.

Mr. Harvey: asked the Minister of Labour whether he will ensure that the Central Register is utilised to a greater extent for the purpose of finding appropriate work for the persons registered in it and not merely for finding persons occasionally for particular vacant posts?

Mr. Bevin: I would refer my hon. Friend to the reply which I gave on 18th July to the hon. Member for Dudley (Mr. Joel). I would add that more than 7,000 posts have been filled through the Central Register since the outbreak of war.

Mr. Harvey: Has there been an increase since the right hon. Gentleman undertook his office?

Mr. Bevin: I must have notice of that question.

Mr. Craven-Ellis: How many names are on the Central Register?

Mr. Bevin: I must have notice of that also.

Sir Patrick Hannon: asked the Minister of Labour whether he can make a statement on the extent to which his Ministry has taken advantage of offers of national service from business men over military age with experience of business administration, control of labour, and works maintenance; and whether any inspection of the Register is kept in process in order to take advantage of the services of highly-qualified business men?

Mr. Bevin: The Central Register has been able to place into employment on work of national importance over 7,200 persons. The classification of the Register does not correspond with the categories mentioned by my hon. Friend, and I cannot give separate figures for them, but if he will let me know more precisely the classes of candidates he has in mind I will send him such information as is available. The answer to the last part of the Question is in the affirmative, but I would refer my hon. Friend to the statement I made on 27th June last in reply

to the hon. and learned Member for East Leicester (Mr. Lyons), in which I explained that the special abilities of many professional and business men are not required for the war industries, and suggested other directions in which their services would be of value.

Sir P. Hannon: Will the right hon. Gentleman give instructions for a review to be made of the great number of applications from capable administrative people in industry who are seeking some form of war employment?

Mr. Bevin: Steps are being taken by the Central Register. They are engaged on the task of improving the arrangement and are actually getting down to the interviews in order to ascertain the qualifications and abilities of the people on the Register, but I must remind the hon. Gentleman that of the people on the Register, 90 per cent, are in employment, and they seek to transfer from that employment to what they assume will be probably a better post somewhere else, and that creates difficulties.

Mr. R. Gibson: How many names are there still on the Central Register?

REMUNERATION.

Mr. Butcher: asked the Minister of Labour what steps are taken to maintain a fair relationship between the pay of the men in the Fighting Services, men in the Civil Defence Services and men reserved in civil occupations for work of national importance?

Mr. Bevin: I would refer my hon. Friend to the answers given on 1st August by the Chancellor of the Exchequer in reply to the hon. Member for Denbigh (Sir H. Morris-Jones), and by myself in reply to the hon. Member for West Birmingham (Mr. Higgs).

Mr. Granville: Will the right hon. Gentleman represent the point of view in the Question to his colleagues, and particularly to the Secretary of State for War?

Mr. Gallacher: Will the right hon. Gentleman take note of the great discrepancy between the pay of the men of the Armed Forces and the salaries of bank directors?

WOMEN LABOUR.

Miss Ward: asked the Minister of Labour whether, as the present demand for women in munition factories is limited, and it is unwise to suggest there is a large demand for women labour all over the country before the proper machinery has been created to absorb it, he will withdraw the permission given by his Department for the release of a film doing propaganda work for his Department entitled "A Call for Arms"?

Mr. Bevin: While the present demand for women in munition factories is limited, there must be a growing demand for women labour as the programme expands and output is accelerated. I had no responsibility for the preparation of the film referred to and do not propose to take any action in the matter.

Miss Ward: Is the right hon. Gentleman aware that in a certain munitions area where the hours of work and wages have been reduced owing to the low demand for labour, an angry crowd of women went to the Employment Exchange? Does he really think it is quite fair for a film depicting women fainting, with such captions as "Will you come and help?" to be shown throughout the country?

Mr. Bevin: I think the hon. Lady should put that question to those who produced the film.

Miss Ward: Is the right hon. Gentleman aware that his Department was asked to approve the film as suitable propaganda, and passed it?

Mr. Bevin: I do not accept that.

Miss Ward: asked the Minister of Labour what facilities are now available for women now unemployed if they desire to train as cooks?

Mr. Bevin: The few remaining classes which were run for me by the Central Committee on Women's Training, and Employment have come to an end. Considerable difficulty was experienced in obtaining recruits for these classes, and moreover there are large numbers of unemployed women cooks on the registers of the Employment Exchanges. In these circumstances, I do not feel that there is at present any special need for training facilities of this type.

Miss Ward: May I ask that, if in future it should become necessary and women want to train as cooks, there shall be classes available?

Mr. Bevin: That is a hypothetical Question. It may be that we shall want to train men as cooks.

WAGES.

Sir Robert Tasker: asked the Minis ter of Labour whether he is aware that a man summoned at Northampton for not paying a debt of £4 was earning an aver age of £21 4s. 11d. per week; that another man summoned for not paying a judgment summons of 4s. 6d. per week was stated, in evidence, to be re ceiving an average of £12 17s. 10d. per week, and to have earned £20 per week; and as both were employées of Messrs. Stewart and Lloyds, will he take action to prevent this excessive payment of wages?

Mr. Bevin: I am not aware of either the hours worked or output produced by these men, but I presume that they were working according to the terms and conditions of a collective agreement. If the question of the respective incomes of different citizens in the country is to be taken into account, it cannot be limited to workmen.

Sir R. Tasker: Is the right hon. Gentleman aware that highly skilled engineers are receiving less than one-quarter of the wages set out on the Paper? Can he take no action to prevent opportunist exploitation of the nation's needs? Would it not be better to compel exploiters to observe the same patriotism as that exhibited by the highly skilled engineers?

Mr. Bevin: I do not accept the word "exploitation." The wages that are being paid are fixed by collective agreement. The only abnormal conditions which did arise, and which upset the wage arrangements of the country, were where one employer against another sought to poach labour in the early days of the war, and they really blacklegged their own side.

INTERNESS (RELEASE).

Sir Richard Acland: asked the Minister of Labour whether he will explain the machinery he proposes to use to overcome the present difficulties which the International Labour Branch will encounter because they cannot give an


internee a job until he is released, while he will not normally be released until a job has been found for him?

Mr. Bevin: The question of release from internment is not a matter for my Department but for the Home Office, and under present arrangements the International Labour Branch of my Department is not primarily concerned with finding employment for persons who are interned. The categories at present eligible for release are set out in the recent White Paper (Cmd. 6217), though further categories may be added later.

Sir R. Acland: Will the right hon. Gentleman consult with the Home Secretary to see whether there is some way in which an agent of this International Labour Branch might be able to go into the internment camps and discover what skill there is available among reliable men, and take that information to likely employers?

Mr. Bevin: I take the view that any interference on the part of my Department with the question of internment will nullify the whole object of the scheme that I have attempted to work out. The question of internment, and release from internment, is one of security and of judicial decision on the part of the Minister of Home Security. My task begins when he has finished his. If I go beyond that, I believe I shall upset the whole scheme.

Sir R. Acland: Will the right hon. Gentleman state what his task is in finding work, since these men will not be released until they have found it?

Mr. Bevin: That is outside the scope.

Sir R. Acland: I will raise the question when an opportunity presents itself.

BRITISH WORKERS (ALIEN BIRTH).

Mr. R. C. Morrison: asked the Minister of Labour on whose instructions employers engaged on munition and aircraft work are refusing to employ men of British birth because of their alien parentage; and will he take steps to cancel this instruction?

Mr. Bevin: I know of no general instruction debarring British persons of alien birth from employment on munitions or aircraft work. If my hon.

Friend has any particular cases in mind, he should refer them to the Minister responsible for the work in question.

Mr. Glenvil Hall: Has my right hon. Friend's attention been called to a very shocking case at Birmingham, where the son of a German mother has been arrested just because he happens to be the son of a German mother?

Mr. Bevin: I have no knowledge of that.

UNEMPLOYED.

Sir Patrick Hannon: asked the Minister of Labour whether he contemplates the introduction without delay of a comprehensive scheme to deal with the unemployment of workpeople in the distributive and other trades, which is arising from reduced consumption and limitation of production of non-essential goods?

Levy: asked the Minister of Labour what steps are being taken to absorb immediately into employment those who are thrown out of work by restriction of home consumption; and whether men and women in non-essential industries who are rendered unemployed by these measures are to be trained in the production of munitions?

Mr. Bevin: As workpeople become unemployed as a result of reduced consumption and limitation of production of non-essential goods, my object is to get them as quickly as possible into essential work or services, after training when this is necessary, and the available opportunities are brought to their notice by the Employment Exchanges. Such workers may register before they are actually unemployed so that, if possible, any intervening period of unemployment may be avoided. In this connection, I would refer my hon. Friends to the statement I made on 27th June last in reply to the hon. and learned Member for East Leicester (Mr. Lyons) of which I am sending them a copy.

Sir P. Hannon: Does the Minister contemplate any extension or revision of the present system of training people who lose their employment so that they can be taken into productive employment, in munitions, and so on?

Mr. Bevin: A little later I shall be making a statement on training.

Mr. Levy: What are these people to do in the meantime, while they are unemployed and have not been absorbed into munitions production?

Mr. Bevin: The only thing to which they are entitled by decision of the House is unemployment pay. That is the responsibility of the House.

Mr. Stokes: Are we to understand that instructions are being given to employers that they should warn their employés at least two or three weeks or a month before they are likely to discharge them on account of this restriction?

Mr. Bevin: By arrangement with my right hon. Friend the President of the Board of Trade, every time there is a restriction about to come into operation, a liaison arrangement exists, and we endeavour to find out the places. That is on the factories side. On the distributive side, it is not quite so easy, because the effect is indirect. I will, if it is so desired, take steps to make a special request that employers may co-operate with their workpeople when they foresee that these difficulties will arise.

Mr. Craven-Ellis: Can the right hon. Gentleman give the approximate number of those who have become unemployed as a result of this restriction, and how many of that number have gone into munitions work?

Mr. Bevin: It is absolutely impossible. A works may be on luxury work—for example, needlework. A factory which I have in mind was working on luxury work, and before the restriction operated, practically the whole of that work was transferred over to parachute work. Therefore, one cannot say exactly how many are transferred.

SKILLED WORKERS (TRAINING).

Mr. Neil Maclean: asked the Minister of Labour what steps he is taking to increase the number of skilled workers; and what arrangements he is making to expand training?

Mr. Bevin: As the answer to this Question is rather long, I will, with the permission of the House, postpone it to the end of Questions.

Later—

Mr. Bevin: I am glad to have this opportunity of making a statement on the subject of the need for an increase in the

number of skilled workers and the expansion of training. There does appear to me to be a lack of appreciation in industry generally of the enormous need for a rapid expansion of training to meet the requirements of the expanding programme of munition production and the maintenance of a satisfactory export position. In this field it must be recognised that the enemy has paid special attention to this problem and if the Services are to be fully equipped and the necessary exports maintained then the whole of industry must devote more attention to this problem. Up to the moment, so far as training in the workshops is concerned, we have adopted the methods of persuasion, and this was necessary because we had to meet the urgent demands made upon industry by the exigencies of the war and the re-equipping of our Forces over the past three months and had, therefore, to use the facilities and machine tools that were ready at hand for actual productive work. I have done all that I can in co-operation with the Production Departments and the Engineering Employers' Federation to induce employers to undertake the maximum amount of training of men, both at the higher and lower levels of skill, and also the introduction and training of women. I have called in the experts to advise me as to how far and to what extent skilled men can be released, even in the manufacture of machine tools. I have caused the labour supply committees, the inspectors of labour supply and the factory inspectors to stimulate employers in every possible way to undertake training. If training is undertaken in the workshop it doe's mean that for a short period there may be a small sacrifice of immediate production. This temporary sacrifice must be faced but will be made good in very quick time. The Government are satisfied that the war is not going to end in the immediate future, and it is therefore of vital importance to initiate now the necessary steps that not only make good the temporary loss but will so greatly accelerate production a little later.
I am afraid that some employers are to some extent living in a fools' paradise in the matter of skilled labour. They must realise that the scarcity of various classes of skilled labour, as had already been revealed, will, in the absence of extensive


provision of training, be greatly accentuated by other factors. For example, large numbers of skilled men have been released from the Forces for return to the engineering factories. In the recent month it reached the figure of over 3,000. But the release is only provisional and with the growing needs of an expanding mechanical army, many of these men may have to go back at a later date. Further, it must not be assumed that the present rules in regard to reservation of certain occupations at certain ages can stand for the duration of the war. Here again there is an increasing demand for men for the Forces, both as tradesmen and for general service and it is by no means certain that the present balance as between industry and the Forces can remain undisturbed.
The training in the factory having regard to these factors must make provision for the training of (a) highly skilled people; (b) those who, with little training, can be turned into effective productive units; and (c) women; and under these three headings it must work in association with a continuous process of up-grading. The lesser skilled men and the women cannot be absorbed unless this up-grading and training process is accelerated. Therefore, with the upgrading the employers create the vacancies, and the necessary action can then be initiated through the Employment Exchange machinery to make the lesser skilled and women available by means of transfer from other industries. There is no excuse for delay. Employers have already been informed that the additional cost of training will be met by the Government. Training is much more effective, both for the works and for those being trained, if it is carried out voluntarily and with good will. I am therefore reluctant to make training obligatory on all employers but conditions may arise when this would have to be done. Employers should not wait for orders and regulations but should co-operate immediately in the solution of this problem.
The next form of training I desire to explain is the Government training centres. While these centres can contribute, they cannot take the place of training in the factory itself. These training centres operated by my Department were originally established for a special purpose in connection with unem

ployment, and only accepted men from the depressed areas. When the rearmament drive began the area of recruitment was extended to the whole country, and in the early months of the war my predecessor decided that the centres should be converted entirely from a social service to an essential part of the Government war machine. The capacity of the centres was extended and the technique of rapid training of new entrants to industry was introduced, so that they became highly semi-skilled workers within four months. People with special aptitudes are passed out in less than that time. I decided to take this a stage further by removing the condition that a trainee must be unemployed, and threw the training open to any person. We are drawing the trainees from almost every trade and calling and irrespective of age. We have also rearranged allowances with a view to removing hardship while men are going through the training period. The number of centres has now been increased to 19 training centres and their capacity greatly expanded. I have set myself as a goal a total of 40 centres, and additional sets of premises have been secured and are being adapted. Whether it will be possible to attain this goal depends on a number of factors which are not within my control. They are: instructors, managerial staff, and what is most important, machine tools and other equipment. I regard this as so vital that I have asked that the training centres should be placed in the highest category of priority in order to get them equipped. But this claim has to be balanced against the claims of immediate production. We have aimed to put the present centres on a full treble shift. As soon as the instructors and necessary staff are obtained the annual rate of output from the present centres should be in excess of 100,000 trainees a year. If the goal of 40 centres is achieved, we should be able to double this.
In the obtaining of instructors I desire to pay my tribute to the Amalgamated Engineering Union, and I have also secured a promise of help from the Engineering Employers' Federation. Every engineering employer should earnestly consider whether he cannot release one or two suitable men to become instructors in the training centres. I have increased the scale of pay, and instructors liable to night work will now receive a minimum


of £350 a year. I am also in need of persons of managerial capacity, who must be men with good technical qualifications and a substantial period of industrial experience.
The next factor in training is that I have, in association with my right hon. Friends the President of the Board of Education and the Secretary of State for Scotland, initiated a scheme of short courses of training through the technical colleges, and a number of classes are in operation. Many more should begin shortly. I am anxious that the technical colleges should produce at a rate of not less than 50,000 per year. I am also setting up training arrangements in garages, maintenance shops and other shops which have unused capacity, and I am trying in these ways to add substantial additions to the ranks of the trained workers for the war production campaign.
In this total war a combination of all these factors is essential if our needs are to be supplied. If the employers concerned are seized with the importance of training equally with my Department, I am satisfied that, with the aid of our Dominions and the United States of America, and with the fullest use of our man-power and the resources at our command, we can overtake any disparity that may now favour the enemy. It is, therefore, worth while making a supreme effort in this field.

Captain Bellenger: The right hon. Gentleman referred to German methods in this connection. Although I am not suggesting that German methods are ours, may I ask him whether he is not of the opinion that, at this stage of the war, these appeals are somewhat dilatory; and will he use the powers which he has, or if he has no powers will he seek powers to enforce on industry the appeal which he has now made to them on a voluntary basis?

Mr. Bevin: Parliament gave me the power that was necessary, but it is a little difficult to apply methods of compulsion in every factory alike. When you try to do it purely by regulation, it does not always work out right. I am satisfied that with this appeal to-day and with the response which is already forthcoming, the number of trainees will be doubled very shortly.

Mr. Woodburn: I think the House will welcome the statement which has been made by the Minister, as showing further progress towards the planning of industry. Is the Minister aware, however, that one of the great difficulties is that many skilled men have left highly-skilled work, which cannot be done on a piece-work basis, and have been drafted in to piecework jobs; that it will be very difficult in the normal way to get them back on to machine-tool work, where they are paid at time rates, and that this will handicap the right hon. Gentleman's efforts very considerably? Is the Minister in a position to say that he has made any progress in solving that important problem? I would also ask him whether, in his appeal to the managerial side of industry, he could not ask existing managers of many engineering works which are not hard pressed by urgent munitions work to give part of their time each day to this training in a voluntary way? Could he not do that, when dealing with this matter in the different districts?

Mr. Bevin: As regards the first question I think I made a statement to the House recently that I hoped the problem of the tool-maker was being solved. That was one of the first jobs which I did, by arranging that the average of the shops should be taken with a plus so that a man on a highly skilled job would go to his proper place, instead of being kept on the belts. A great deal has been done in that direction. With regard to the part-time voluntary method of training, apart from the technical colleges, one must have regard to the students as well as the teachers.

Mr. Higgs: I have no doubt the Minister is aware that a large number of manufacturers are already making an effort to carry out his suggestion, but will he explain what they are to do in cities like Birmingham, where they cannot get the labour to train?

Mr. Bevin: If an application is made to the Employment Exchange from any firm in Birmingham which is willing to take labour to train, the arrangements are adequate for the transfer of labour from other districts.

Mr. Stephen: Is the right hon. Gentleman aware that in the Army there are


skilled engineers working as mess attendants and that the Army refuses to release them?

Mr. Bevin: The arrangement with the Army has been worked extremely well. It may be that, temporarily, in the Army, especially now that they are at home, a man may not be actually working at his trade, but I am bound to say this for the Forces that they have responded magnificently to the arrangement which exists between my Ministry and the War Office. Although at the moment men may not be working at their trades, at the same time it would be far too dangerous, with invasion facing us, to ask the Army to disperse all their Service men whom they may at any moment require if there is an attack. The services of these men may be temporarily given to what are regarded as not trade matters, but I am bound to agree that a very large number have to be retained.

Lieut.-Colonel Sir William Allen: Will the right hon. Gentleman consider the advisability of establishing a training centre in Northern Ireland, where there are so many unemployed? I know that the Minister of Labour in Northern Ireland sends men over here for training, but we do require a training centre there.

Mr. Bevin: If the Government of Northern Ireland care to establish a training centre, I will give them advice.

Mr. Wilfrid Roberts: Is the Minister satisfied that the number of places in technical colleges for training women is adequate?

Mr. Bevin: The main and essential thing at this moment is to bring women on to the repetition work, and that is where women have to be brought in.

Miss Ward: Why?

Mr. Bevin: Because there is not time to train women to the highest skill efficiently to meet this programme, and we have to face the fact, especially in the case of women who are transferred from other trades that when trade revives, they will expect to go back to those trades. We have, first, to get the people up-graded and then to bring the women and the semi-skilled and unskilled men into the lower stages.

Several Hon. Members: rose

Mr. Speaker: The Minister has made a very long statement, and it seems to me that it would be preferable that hon. Members should consider it and absorb it, before asking any further questions.

Mr. Gallacher: On a point of Order. I would consider that very good advice in the ordinary course, but there seems to me to be something peculiar about that advice, in view of the fact that I have risen on every occasion to put a question.

Mr. Speaker: I think the hon. Member gets his full share of the time of the House.

Miss Ward: On a point of Order. May I ask my right hon. Friend the Minister a question about his views on the training of women?

Mr. Speaker: That is not a point of Order.

SPECIAL AREAS COMMISSIONER.

Mr. James Griffiths: asked the Minister of Labour whether the Commissioner for Special Areas is still functioning; and what are the intentions of the Government in regard to his office?

Mr. Bevin: Yes, Sir, to the limited extent explained in the replies given to my hon. Friend's Questions on 7th March and nth April last. As regards the second part of the Question, it is my intention to continue the Commissioner's appointment.

Oral Answers to Questions — >MILITARY SERVICE.

LlFEBOATMEN.

Mr. Sorensen: asked the Minister of Labour whether he will enable regular members of a lifeboat belonging to the Royal National Lifeboat Institution to be reserved, similar to fishermen, for the Royal Navy Patrol Service?

Mr. Bevin: Whole-time lifeboatmen are reserved at the age of 18, and are not, therefore, accepted for service in His Majesty's Forces. Part-time lifeboatmen have the reservation, if any, of their normal whole-time occupation.

CONSECIENTIOUS OBJECTORS.

Miss Rathbone: asked the Minister of Labour whether he is aware that there


are some teachers in various parts of the country who have been dismissed from their posts and cannot obtain other posts as teachers because they are conscientious objectors or known pacifists, yet cannot take any other kind of posts because they are in a reserved occupation; and will he take steps to ensure that all such persons, whose names and facts are supplied to him, will be removed from the category of persons in a reserved occupation?

Mr. Bevin: I would refer the hon. Lady to my answer in the House on 18th July regarding the treatment of conscientious objectors by their employers. As I have stated on several occasions, there is nothing in the Schedule of Reserved Occupations which prevents a teacher or any other person from taking any kind of post, other than a whole-time post in one of the Services of National Defence.

Miss Rathbone: Is the right hon. Gentleman aware that some of these conscientious objectors would be willing to serve in the Royal Army Medical Corps, but are not allowed to do that because they are in a reserved occupation as teachers, and yet they are not allowed to teach?

OLD AGE PENSIONS.

Mr. Tinker: asked the Minister of Health whether he is aware that there is doubt existing over the question as to what is new money lent to the nation during the war, and many applicants for supplementary old age pensions who have placed their savings in War Savings Certificates or trustee savings banks are told this is not new money and cannot be disregarded; and will the Minister state what is the exact position and the Government's intention over new money?

Mr. Dunn: asked the Minister of Health whether investments in co-operative societies will be disregarded for purposes of old age pensions in exactly the same way as investments in War Savings Certificates, Post Office savings and gilt-edged securities; is he aware that considerable anxiety exists in the country in respect of this matter; and, further, has he made any arrangements with representatives of the societies in this matter?

Mr. Burke: asked the Minister of Health the position of applicants for

supplementary pension who have bought War Savings Certificates?

The Minister of Health (Mr. Malcolm MacDonald): I would refer the hon. Members to the undertaking given by the late Chancellor of the Exchequer with regard to war savings. Pending the introduction of the legislation necessary to give effect to this undertaking, I regret that I am not in a position to make any further statement on the subject.

Mr. Tinker: I am aware of the reply to which the right hon. Gentleman has referred, but there is a great deal of unrest about this matter. Can we be told something definite as to when the Bill will be introduced; and at the same time will the Minister take into consideration the savings of the present applicants for supplementary pensions?

Mr. MacDonald: I think that matter will be made quite definite when the Bill is introduced, as I understand it will be to-day.

Mr. Burke: What instructions have been given to the people who are to administer this?

Mr. MacDonald: The Bill will be introduced to-day, so that the position will be quite clear. I cannot add anything at present.

Mr. A. Bevan: asked the Minister of Health whether an instruction has been sent out to investigators of the Assistance Board to renew all investigations in respect of applications for supplementary old age pensions which did not take into account the income of "in-laws"?

Mr. MacDonald: I am informed by the Board that, so far as they are aware, no such instruction has been issued.

Mr. Bevan: Is the Minister aware that in many instances forms have been called in; and that the information of the Board does not correspond with the experience of hon. Members. Is he further aware that investigations are being made which are a violation of the undertakings given to this House?

Mr. MacDonald: I have made inquiries from the Board on this subject, and I have given the House the information I have received. If the hon. Member has information which is in conflict, I shall be very glad to receive it and go into the matter.

Mr. Bevan: Does the right hon. Gentleman think it is competent for investigation officers to demand to know the incomes of "in-laws"?

Mr. MacDonald: What the investigation officers should do is laid down in the Regulations, and they have carried out their work in such a way that, so far as the Board is aware, no further instructions on this point have been necessary, but, if the hon. Member has any cases, I will gladly examine the question.

Mr. Muff: May I also send cases to the Minister?

Mr. J. Griffiths: asked the Minister of Health how many applications have been received for supplementary allowances from old age pensioners; how many of the applications have been granted; and what is the average rate of the supplementary allowance?

Mr. MacDonald: Up to and including 2nd August, the latest date for which information is available, approximately 1,360,000 applications for supplementary pensions have been received. At that date approximately 920,000 supplementary pensions had been granted, whilst 340,000 applications had either been withdrawn or supplementary pensions had not been granted on grounds of ineligibility or because the applicant was deemed not to be in need. With regard to the last part of the Question, information is not yet available as to the average weekly payment of supplementary pension, but I will furnish it to the hon. Member in due course.

Mr. Buchanan: Do those figures include Scotland?

Mr. MacDonald: I think they include the whole of the British Isles.

Mr. Lipson: Can instructions be given that Members of Parliament shall receive the figures from their local officers?

Mr. MacDonald: I do not think that I can do that, but if any hon. Member wishes to have information, I will endeavour to give him such information myself.

Mr. J. Griffiths: asked the Minister of Health whether he is aware of the dissatisfaction at the small amounts of supplementary allowances granted to many old age pensioners; that in many cases

the allowances are only 3s. 6d. per week; and how these amounts are fixed?

Mr. MacDonald: The reply to the first part of the Question is in the negative. As regards the second part the amounts of pensions are calculated in accordance with the rules set out in the Supplementary Pensions (Determination of Need and Assessment of Need) Regulations, 1940. It is not possible without knowing all the facts to say how a supplementary pension has been calculated in a particular case, but if the hon. Member has any particular case or cases in mind and will let me have particulars, I will make inquiries.

Mr. Griffiths: Is the Minister aware that the operation of the household means test is creating even greater concern in the case of old age pensioners than in the case of the unemployed? Is he further aware that during this week I have had scores of letters from different parts of the country, indicating that the amounts of the supplementary allowances awarded to old age pensioners are in the region of 1s., 1s. 6d. and 2s. a week? Will he have a review of this matter before he creates a storm in the country?

Mr. MacDonald: In regard to the figure of the supplementary pensions, I have already undertaken to let the hon. Member have information of the average figure as soon as I can, and I expect that will be in the near future. I think that the hon. Member will find that the average figure is very much higher than the sort of figures he has quoted this afternoon. In regard to the principle of the household means test, that was debated in this House, and the legislation is being carried out in accordance with the decision of the House.

Mr. Griffiths: Will the Minister address himself, in particular, to the hardship created because of the way in which the rules are being operated, in that sons-in-law and daughters-in-law are treated as members of the same household? In view of the national interest, will he look into this problem at once?

Mr. MacDonald: I am certainly willing to look into that sort of question. Naturally, I am dependent upon hon. Members to let me have information they may have which would justify an investigation and help me in the problem. Beyond that, I cannot go.

Mr. Silverman: asked the Minister of Health why the Assistance Board refuse to determine the application of Mrs. Jemima Varley, a widow aged 79, of 104, Manchester Road, Nelson, for a supplementary old age pension until she furnishes the income of the landlord from whom she rents an unfurnished room at 5s. per week?

Mr. MacDonald: I am having inquiry made and will communicate with the hon. Member.

Mr. Silverman: Is the right hon. Gentleman aware that it is becoming a practice with the Assistance Board to require these particulars, and to refuse determination whenever the old age pensioner happens to rent a room from someone who is a relative instead of someone who is a friend?

Mr. MacDonald: I will look into the matter as soon as I have obtained information from the Board.

Mr. Lipson: asked the Minister of Health whether he is aware of the great concern felt by many needy and deserving old age pensioners in Cheltenham at the rejection of their applications for supplementary pensions; in particular, why has a supplementary old age pension been refused to Mrs. C. Farley, of 33, Leighton Road, Cheltenham, age 83, whose sole income is the old age pension of 10s. a week and who has to support her daughter and herself?

Mr. MacDonald: I am having inquiry made and will communicate with the hon. Member.

Mr. Lipscn: Is the right hon. Gentleman aware that I have already sent him particulars of some very bad cases, and that since then I have had a number of very hard cases. Is he aware, now that we have had experience of the way in which this law has been administered, that it will either have to be better administered or amended?

Mr. Gallacher: Could not the Minister have a report from the "snoopers" on this matter?

Oral Answers to Questions — LOCAL AUTHORITIES.

STAFFS (STOPPAGE OF HOLLIDAYS).

Mr. Watkins: asked the Minister of Health whether he will give a ruling on

the question of local authorities compensating financially members of their staffs who were precluded from taking their holidays during 1939 by the war situation?

Mr. M. MacDonald: This matter is not one in which I am empowered to give a ruling, or on which advice could be given in general terms. Employees' rights vary with the terms of their contract of employment, and the legality and reasonableness of any payments must be left for consideration in the first instance by the district auditor. While I cannot anticipate his decision, I have no reason to expect that difficulty will arise over reasonable payments.

GRANTS.

Mr. Sorensen: asked the Minister of Health whether, in view of the increased and increasing expenditure of grant-aided institutions, he will consider increasing the block grant to municipal authorities responsible for such institutions?

Mr. M. MacDonald: I am not entirely clear to what payments the hon. Member is referring. The block grant payable to local authorities is recalculated periodically at the end of periods of five years. The present period does not expire until 31st March, 1942, and I have no power to alter the amounts payable to local authorities in the interval.

Mr. Sorensen: Does the Minister appreciate that, between the time when the last block grants were fixed and now many great changes have taken place, and the value of the grants has altered considerably, and, in view of legislation now before the House, does he appreciate that many of these grant-aided institutions have been involved in very heavy expenditure indeed which has to be passed on to the ratepayers?

Mr. MacDonald: As far as local authorities are concerned, they have been put into particularly acute difficulties owing to the changes to which the hon. Member has referred. We have already indicated that if they are not able, out of their own resources or by the normal procedure, to raise the necessary money for carrying on essential services, then the Government will put them in funds and come to their aid. I think that position is quite satisfactory.

PADDINGTON BOROUGH COUNCIL.

Mr. Isaacs: asked the Minister of Health whether his attention has been drawn to the action of the emergency committee of the Paddington Borough Council in suspending all council and committee meetings; and whether, in view of the fact that all other local authorities are continuing to function normally and that no reason has yet arisen to prevent this council doing likewise, he will make representations to the local authority on the matter?

Mr. M. MacDonald: My attention has not previously been drawn to this matter, which is primarily one for the council to determine and in regard to which I have no statutory powers. I am, however, communicating with the council.

NUMBER OF HOUSES COMPLETED SINCE THE OUTBREAK OF WAR.


1. During the eight months from 1st August, 1939, to 31st March, 1940, 27,841 houses were completed under the Housing Acts of which 21,925 were subsidised. During the six months ended 31st March, 1940, 60,311 houses were erected by unassisted private enterprise.


2. The distribution by counties was as follows:

Name of County (including the Associated County Boroughs).
Under the Housing Acts (in respect of the period 1st August, 1939, to 31st March, 1940).
Other than under the Housing Acts (in respect of the period 1st October, 1939, to 31st March, 1940).
Total of Columns 1, 2 and 3. 4


In respect of which Government contributions were made.
Other houses.


1.
2.
3.
4.


ENGLAND (excluding Monmouth).






Bedford
…
…
…
…
9
86
657
752


Berks
…
…
…
…
76
59
652
787


Buckingham
…
…
…
95
450
577
1,122


Cambridge
…
…
…
48
124
306
478


Chester
…
…
…
…
257
217
2,113
2,587


Cornwall
…
…
…
…
92
73
363
528


Cumberland
…
…
…
269
144
220
633


Derby
…
…
…
…
146
178
1,022
1,346


Devon
…
…
…
…
270
4
1,349
1,623


Dorset
…
…
…
…
149
55
472
676


Durham
…
…
…
…
1,908
—
1,004
2,912


Ely, Isle of
…
…
…
92
15
95
202


Essex
…
…
…
…
433
—
1,988
2,421


Gloucester
…
…
…
125
239
1,440
1,804


Hereford
…
…
…
…
—
18
172
190


Hertford
…
…
…
…
57
136
1,500
1,693


Huntingdon
…
…
…
7
—
70
77


Kent
…
…
…
…
304
118
1,898
2,320


Lancaster
…
…
…
…
2,286
468
6,760
9,514


Leicester
…
…
…
…
86
7
687
780


Lincoln:—


Parts of Holland
…
…
53
37
42
132


Parts of Kesteven
…
…
58
20
104
182


Parts of Lindsey
…
…
67
—
669
736


London
…
…
…
…
3,232
809
813
4,854


Middlesex
…
…
…
…
86
283
4,861
5,230

HOUSING (STATISTICS).

Mr. Rostron Duckworth: asked the Minister of Health how many houses have been completed since the start of the war; how many of these were subsidised; and whether he can indicate by counties where they are situated?

Mr. M. MacDonald: It is not possible to give my hon. Friend the precise information for which he asks, as the normal monthly returns were discontinued at the beginning of the war and replaced by six-monthly returns. Subject to this the information is available, but as the answer involves columns of figures I will, with permission, circulate it in the OFFICIAL REPORT.

Following is the answer:

Name of County (including the Associated County Boroughs).
Under the Housing Acts (in respect of the period 1st August, 1939, to 31st March, 1940).
Other than under the Housing Acts (in respect of the period 1st October, 1939, to 31st March, 1940).
Total of Columns 1, 2 and 3.


In respect of which Government contributions were made.
Other houses.



1.
2.
3.
4.


ENGLAND (excluding Monmouth).—cont.






Norfolk
…
…
…
…
271
124
571
966


Northampton
…
…
…
247
234
174
655


Northumberland
…
…
…
1,056
20
1,548
2,624


Nottingham
…
…
…
345
75
1,005
1,425


Oxford
…
…
…
…
100
29
229
358


Peterborough, Soke of
…
…
—
—
89
89


Rutland
…
…
…
…
7
51
8
66


Salop
…
…
…
…
228
158
299
685


Somerset
…
…
…
…
429
83
756
1,268


Southampton
…
…
…
317
62
2,208
2,587


Stafford
…
…
…
…
1,823
199
3,329
5,351


Suffolk, East
…
…
…
116
53
339
508


Suffolk, West
…
…
…
97
39
63
199


Surrey
…
…
…
…
147
184
4,280
4,611


Sussex, East
…
…
…
116
94
1,322
1,532


Sussex, West
…
…
…
82
96
1,110
1,288


Warwick
…
…
…
…
1,074
—
3,330
4,404


Westmorland
…
…
…
33
—
84
117


Wight, Isle of
…
…
…
—
35
136
171


Walts
…
…
…
…
70
121
405
596


Worcester
…
…
…
279
21
901
1,201


York:—


East Riding
…
…
…
296
13
723
1,032


North Riding
…
…
…
222
—
393
615


West Riding
…
…
…
3,506
33
4,929
8,468


WALES (with Monmouth).


Anglesey
…
…
…
…
81
—
48
129


Brecknock
…
…
…
54
—
34
88


Caernarvon
…
…
…
15
9
79
103


Cardigan
…
…
…
…
12
18
34
64


Carmarthen
…
…
…
64
—
102
166


Denbigh
…
…
…
…
8
34
180
222


Flint
…
…
…
…
24
268
250
542


Glamorgan
…
…
…
417
270
1,116
1,803


Merioneth
…
…
…
…
1
10
8
19


Monmouth
…
…
…
141
43
335
519


Montgomery
…
…
…
8
—
11
19


Pembroke
…
…
…
…
34
—
44
78


Radnor
…
…
…
…
—
—
5
5



21,925
5.916
60,311
88,152



27,841




NOTE.—Under the consolidation effected by the Housing Act, 1935, the Exchequer grants payable under the several Housing Acts in respect of houses provided by local authorities as housing authorities are all credited to an account called the Housing Revenue Account which deals with all houses (with a few exceptions) provided by the authority as a housing authority.

HOUSING (REPAIRS).

Mr. Glenvil Hall: asked the Minister of Health what representations have been made to him by the National Federation of Property Owners urging him to postpone until after the war all

demands made by sanitary authorities upon property owners; and what was his reply thereto?

Mr. M. MacDonald: The representations made to me by the Federation urged that owners of property should be


relieved of some of the requirements which local authorities are empowered to make with regard to the carrying out of repairs, etc., to their property. I have informed the Federation that while appreciating the difficulties both of owners and local authorities in this connection, I see no reason to modify the views expressed by my predecessor in his reply to my hon. Friend the Member for Moseley (Sir P. Hannon) on 14th March, of which I am sending the hon. Member a copy.

JERSEY MODERN SCHOOL.

Mr. Ammon: asked the Minister of Health whether he is aware that the headmaster of the Jersey Modern School was informed by his Department, on 16th July last, that his school had been evacuated to a place to which, on inquiry, the chief billeting officer stated that the school had not been evacuated, and is it possible to give inquirers any information as to what has happened to this school?

Mr. M. MacDonald: I am unable to trace the incident to which the hon. Member refers. The information available indicated that the Jersey Modern School did not leave Jersey as a school party, though some of the pupils attending this school came to this country with their families or in other groups. Two of these pupils were billeted for some time in the place which I understand the hon. Member has in mind but have since been removed in the care of a relative.

Mr. Ammon: Has not the right hon. Gentleman received any duplicates of the letters sent out?

Mr. MacDonald: I have given the hon. Member all the information at my disposal.

Mr. Ammon: Then perhaps I had better send him his own correspondence.

CHANNEL ISLANDS (REFUGEES).

Mr. Ammon: asked the Minister of Health whether arrangements for succour and housing of British refugees from the Channel Islands can be provided, at least equal to that of foreign refugees?

Mr. M. MacDonald: Yes, Sir, and in addition special arrangements have been made to billet unaccompanied school parties from the Channel Islands under the Government evacuation scheme.

Mr. Ammon: How does my right hon. Friend account for the large numbers of the refugees, who are our own nationals, being placed under conditions which lack decency and privacy?

Mr. MacDonald: If the hon. Member has cases in which he feels that the principle of the proper treatment of these people is being contravened, I will look into them, but my information is that in general the position is satisfactory and very much appreciated by the Channel Islanders.

Mr. Mander: In view of conditions in the refugee camps, will not the right hon. Gentleman's answer be poor consolation to the Channel Islanders?

ARMED FORCES (HOSPITAL PATIENTS).

Mr. Shinwell: asked the Minister of Pensions what arrangements are made for the provision of comforts, including cigarettes and tobacco, to ex-Service patients and wounded members of the British Expeditionary Force in Ministry of Pensions and other hospitals; whether he is aware that many men are unable to afford these comforts for themselves, and that gifts are seldom received or are unequally distributed; and whether he will take steps to improve the position?

The Minister of Pensions (Sir Walter Womersley): I am glad to say that comforts of many kinds, including cigarettes and tobacco, are sent to Ministry of Pensions hospitals through the generosity of the Order of St. John and the British Red Cross Society and a number of other voluntary bodies and private donors, and their action is greatly appreciated by the patients. I am assured by my right hon. Friend the Minister of Health that similar provision is made in the hospitals of the Emergency Medical Service.

Mr. Shinwell: While appreciating what the hon. Gentleman has done in this matter, may I ask him to see that some of the inequalities to which the men are subjected and to which reference has been made in correspondence between hon. Members and the Minister will be removed?

Sir W. Womersley: There have been complaints that the distribution is not quite even between hospital and hospital and in some cases between patient and patient, and I am going carefully into the matter.

HIS MAJESTY'S SHIP "DUCHESS" (LIEUTENANT'S WIDOW).

Commander Sir Archibald Southby: asked the Minister of Pensions whether his attention has been called to the case of Mrs. Peter Tilden, whose husband, Lieutenant Peter Tilden, Royal Navy, was lost in the sinking of His Majesty's ship "Duchess," and who has been refused the £200 grant payable under the Order-in-Council, September, 1939, to the widows of lieutenants killed in action on the grounds that the loss of His Majesty's ship "Duchess" was not directly occasioned by enemy action; and whether he will take such steps as are possible to remedy the injustice caused to widows in this and similar cases?

Sir W. Womersley: I am aware of this case. The decision is governed by the terms of Article 55 of the Naval Order-in-Council, which, in this matter, is in accordance with the reasoned recommendations of successive committees on which there were representatives of the Admiralty as well as of the other two Service Departments. Their recommendations were accepted by the Government.

Sir A. Southby: Is my hon. Friend aware that although His Majesty's ship "Duchess" was not lost as a result of direct enemy gunfire, it was engaged on military operations when it was sunk, and is it not very unfair that relatives of officers and men lost under those conditions should be penalised for what is a pure technicality?

Sir W. Womersley: I have gone very carefully into this case, and I can assure my hon. and gallant Friend that the facts are not exactly as he stated. I would further point out that there are no gratuities to the men. The gratuities that are given in the case of officers killed by enemy action do not apply to men.

Sir A. Southby: If the Regulations do not permit a gratuity being paid in cases where it should be paid in accordance

with the spirit of the desire of the House when the Regulations were passed, should not my hon. Friend undertake to have the law amended?

INDIA (CONSTITUTION).

Mr. Sorensen: asked the Secretary of State for India whether he has considered a recent statement by Mr. Gandhi respecting political developments in India; and whether he has any further statement to make on the present position?

The Secretary of State for India (Mr. Amery): If the hon. Member is referring, in the first part of his Question, to the recent article by Mr. Gandhi in his periodical "Harijan," I regret that a reply of mine to a Supplementary Question on 25th July should have lent itself to an interpretation which was certainly not intended. That His Majesty's Government are seriously concerned with the situation in India and anxious to bring about co-operation between all parties will, I think, be clear from the statement which I have to make in answer to the second part of the hon. Member's Question. As that statement is rather long, I will, with Mr. Speaker's permission, read it at the end of Questions.

Later—.

Mr. Amery: I am glad to have an opportunity of drawing the attention of the House to a Statement issued in India this morning by the Governor-General with the authority of His Majesty's Government. The text of the Statement has been issued as a Command Paper which is now available in the Vote Office, but I think it is of sufficient importance to justify my reading it now to the House. The Statement is as follows:
India's anxiety at this moment of critical importance in the world struggle against tyranny and aggression to contribute to the full to the common cause and to the triumph of our common ideals is manifest. She has already made a mighty contribution. She is anxious to make a greater contribution still. His Majesty's Government are deeply concerned that that unity of national purpose in India which would enable her to do so should be achieved at as early a moment as possible. They feel that some


further statement of their intentions may help to promote that unity. In that hope they have authorised me to make the present statement.
2. Last October, His Majesty's Government again made it clear that Dominion Status was their objective for India. They added that they were ready to authorise the expansion of the Governor-General's Council to include a certain number of representatives of the political parties, and they proposed the establishment of a consultative committee. In order to facilitate harmonious co-operation, it was obvious that some measure of agreement in the Provinces between the major parties was a desirable pre-requisite to their joint collaboration at the Centre. Such agreement was unfortunately not reached, and in the circumstances no progress was then possible.
3. During the earlier part of this year I continued my efforts to bring the political parties together. In these last few weeks I again entered into conversations with prominent political personages in British India and the Chancellor of the Chamber of Princes, the results of which have been reported to His Majesty's Government. His Majesty's Government have seen also the resolutions passed by the Congress Working Committee, the Moslem League and the Hindu Mahasabha.
4. It is clear that earlier differences which had prevented the achievement of national unity remain unbridged. Deeply as His Majesty's Government regret this, they do not feel that they should any longer, because of those differences, postpone the expansion of the Governor-General's Council, and the establishment of a body which will more closely associate Indian public opinion with the conduct of the war by the Central Government. They have authorised me accordingly to invite a certain number of representative Indians to join my Executive Council. They have authorised me further to establish a War Advisory Council which would meet at regular intervals and which would contain representatives of the Indian States and of other interests in the national life of India as a whole.
5. The conversations which have taken place, and the resolutions of the bodies which I have just mentioned, made it clear, however, that there is still in certain

quarters doubt as to the intentions of His Majesty's Government for the constitutional future of India, and that there is doubt, too, as to whether the position of minorities, whether political or religious, is sufficiently safeguarded in relation to any future constitutional change by assurances already given. There are two main points that have emerged. On those two points His Majesty's Government now desire me to make their position clear.
6.The first is as to the position of minorities in relation to any future constitutional scheme. It has already been made clear that my declaration of last October does not exclude examination of any part either of the Act of 1935 or of the policy and plans on which it is based. His Majesty's Government's concern that full weight should be given to the views of minorities in any revision has also been brought out. That remains the position of His Majesty's Government.
It goes without saying that they could not contemplate transfer of their present responsibilities for the peace and welfare of India to any system of Government whose authority is directly denied by large and powerful elements in India's national life. Nor could they be parties to the coercion of such elements into submission to such a Government.
7.The second point of general interest is the machinery for building within the British Commonwealth of Nations the new constitutional scheme when the time comes. There has been very strong insistence that the framing of that scheme should be primarily the responsibility of Indians themselves, and should originate from Indian conceptions of the social, economic and political structure of Indian life. His Majesty's Government are in sympathy with that desire and wish to see it given the fullest practical expression, subject to the due fulfilment of the obligations which Great Britain's long connection with India has imposed on her and for which His Majesty's Government cannot divest themselves of responsibility. It is clear that a moment when the Commonwealth is engaged in a struggle for existence is not one in which fundamental constitutional issues can be decisively resolved. But His Majesty's Government authorise me to declare that they will most readily assent to the setting up after the conclusion of the war with the least possible delay of a body representative of the principal elements in


India's national life in order to devise the framework of the new Constitution, and they will lend every aid in their power to hasten decisions on all relevant matters to the utmost degree. Meanwhile they will welcome and promote in any way possible every sincere and practical step that may be taken by representative Indians themselves to reach a basis of friendly agreement, first upon the form which the post-war representative body should take and the methods by which it should arrive at its conclusions and secondly upon the principles and outlines of the Constitution itself. They trust, however, that for the period of the war (with the Central Government reconstituted and strengthened in the manner I have described, and with the help of the War Advisory Council) all parties, communities and interests, will combine and co-operate in making a notable Indian contribution to the victory of the world cause which is at stake. Moreover, they hope that in this process new bonds of union and understanding will emerge, and thus pave the way towards the attainment by India of that free and equal partnership in the British Commonwealth which remains the proclaimed and accepted goal of the Imperial Crown and of the British Parliament."

Mr. Sorensen: Has the right hon. Gentleman, in view of the great importance and significance of his statement, communicated with the principal parties in India; and, secondly, will he arrange with the Prime Minister for an early opportunity for this House to have a discussion on the subject?

Mr. Amery: As regards the first part of the question, the hon. Member will see that the Viceroy himself stated that he had been in touch with the leaders of political opinion in India, and I understand that he is in close touch with them now. With regard to the second part of the question, I will leave that to my right hon. Friend the Lord Privy Seal.

Major-General Sir Alfred Knox: In this conference which it is proposed to have after the war, will every class and race in India be represented, together with European interests in India as well?

Mr. Amery: If my hon. and gallant Friend will look at the text, he will see that the wording is:
body representative of the principal elements in India's national life.

Mr. Gallacher: Is the Minister not aware that the closing of the Burma Road has had a very disastrous effect on feeling in India?

Mr. Speaker: rose—

Mr. Gallacher: A statement has been made. Am I not entitled to draw attention to the fact that that statement will have no effect unless certain other action is taken?

Mr. Speaker: That is an expression of opinion; it is not a question.

Sir Stanley Reed: When shall we have an opportunity of knowing who will be the members appointed as additional members of the Viceroy's Executive Council; and if, for reasons which we appreciate, a general discussion of this matter has to be postponed, when shall we have some further information as to the relations between the Consultative Committee and the Government of India as represented by the Governor-General and his Executive Council?

Mr. Amery: The actual personnel of the large Executive Council will, naturally, be a matter for consultation during the next few days between the Governor-General and the representatives of the leading parties. I cannot at this moment say when that process will be completed. The relationship of the Executive Council to the War Advisory Council is that the Executive Council is the Governor-General's Executive Council, carrying on the Government of British India. The War Advisory Council is an All-India council, in which not only representatives of the States but representatives of all interests who can help forward the war effort can be drawn in.

Mr. Sorensen: Does the right hon. Gentleman not appreciate that, in view of his very wide and comprehensive statement, an early date should be arranged for a discussion?

The Lord Privy Seal (Mr. Attlee): If the hon. Member had not got up, I was just going to reply to his previous question. Obviously, if the House wishes to discuss this, an opportunity will be provided. There may be an opportunity on Wednesday next, if the earlier business is finished. Perhaps hon. Members will see whether that is possible after my statement on business.

Sir Percy Harris: Is it not desirable that before we adjourn for the Recess we should have a discussion on the international situation?

Oral Answers to Questions — CIVIL DEFENCE.

REGULATION 39B (REVISION OF PENALTIES).

Mr. Mander: asked the Secretary of State for the Home Department whether he is now able to state the result of his review of proceedings taken under Regulation 39B dealing with statements likely to cause alarm or despondency; how many such proceedings have been taken; in how many cases penalties have been revised; and what general advice has been tendered to magistrates?

The Secretary of State for the Home Department (Sir John Anderson): In accordance with the undertaking which my right hon. Friend the Prime Minister gave to the House on 23rd July, I have carefully reviewed the convictions under Regulation 39BA, and I issued to the Press on 27th July a statement of the result of this review. I cannot conveniently summarise this statement within the limits of an answer to a Parliamentary Question, but I may say that, leaving out of account some 20 cases where the sentences had expired or the fines were small, there were 28 cases which appeared to me to require consideration. I felt justified in one of these cases in advising the remission of part of a sentence of imprisonment and in 12 other cases in advising the remission of substantial parts of the fines. I have issued a circular to chief constables advising them, before submitting cases for prosecution, to consider whether they could not properly be dealt with by a warning, unless the offence has been frequently committed or is otherwise of a serious character. As regards cases in which prosecutions are taken, the appropriate action to be taken by the court must depend on the facts of the individual cases, and I do not think there is any general advice which I could properly give to magistrates, but I think that the steps which have been taken will serve the purpose which my hon. Friend has in mind.

Mr. Mander: Does my right hon. Friend know of any precedent for the wholesale interference by the Executive

with the judiciary that has taken place under this Regulation, and does he think it is desirable that that should occur?

Sir J. Anderson: I do not think it is correct to describe the action taken as wholesale interference with the judiciary. The Prerogative power, which is applicable in all criminal cases, is properly not regarded as interference with the judiciary. There were, as I think the House recognises, special circumstances in connection with these prosecutions, taken as they were at a time of considerable tension, and I did my best in the discharge of my duty to apply some uniformity to the sentences which were inflicted under the Regulation recently passed.

INTERNESS.

Mr. Wedgwood: asked the Home Secretary whether Peter Frolich (C), interned on 1st July while expecting medical examination for joining the Pioneer Labour Corps, comes under any of the categories of those to be released; and also will he say in which camp the boy is now to be found?

Sir J. Anderson: If my right hon. Friend refers to Emmerich Peter Fröhlich, aged 36, this internee, according to the information in the possession of my Department, left for Australia on 10th July.

Mr. Wedgwood: asked the Home Secretary whether he will allow internee Dr. Zoltan Deucht, No. 44498, to come up to the United States of America Consulate to be medically examined for his visa to America; and whether he will reconsider, with a view to economy, the necessity of a military escort in such cases?

Sir J. Anderson: I have arranged for inquiries to be made into this case with a view to Dr. Deucht's attendance at the United States Consulate. It is not proposed to employ military escorts in such cases, except where a considerable number of internees are being moved from one camp to another.

Sir R. Acland: asked the Home Secretary whether he will make it plain that an application for the release of an enemy alien under Categories 4, 5, 6 and 7 can be made not only by an individual or firm which employed that alien in the past, but also by an individual or firm which intends immediately to employ him?

Sir J. Anderson: The point raised by my hon. Friend would involve an extension of the existing categories, and it is being considered by the Advisory Committee.

Mr. Harvey: asked the Home Secretary whether he will expedite the procedure by which suitably qualified refugees may be released from internment by providing applicants for release with a simply worded questionnaire setting out the information they are required to provide before release can be granted; and whether fuller use can be made of the welfare workers in the internment camps in getting this information properly set out?

Sir J. Anderson: The circumstances of each case vary so much that I do not think that a questionnaire would be a satisfactory alternative to the flexible procedure described in the White Paper. As. stated in that document, every facility will be given by the authorities for the preparation of applications by internees and any assistance which the welfare workers can give will be welcomed.

Miss Rathbone: Is not the questionnaire likely to resolve itself into unnecessary trouble for the Home Office?

TREATING.

R. Gibson: asked the Home Secretary from what bodies of a not definitely temperance foundation he has received representations urging the issue of a no-treating order; which of these are situate in Scotland; and from what individuals in official positions he has received such representations?

Sir J. Anderson: Since the outbreak of war, I have received representations urging the prohibition of treating from 12 local church organisations and one local "vigilance committee." None of these bodies was situated in Scotland, but any such representations received from Scotland would have been transferred at once to the Scottish Home Department. One Noble Lord, one Member of this House, and one licensing justice have sent similar representations.

Sir A. Southby: Will my right hon. Friend see that the men of His Majesty's Forces are treated as common-sensed individuals and not as school children?

Mr. Gibson: Will the right hon. Gentleman keep in mind that both in Edinburgh and outside persons in public bars are made the unwilling recipients of information which would be of great value to the enemy?

Mr. Buchanan: Is the Home Secretary aware that the average soldier can look after himself?

Mr. Lipson: asked the Home Secretary how many police officers and medical officers of hospitals, where members of His Majesty's Forces receive treatment, have been asked by him to report on the need for a no-treating order; and how many of these officers recommend the imposition of an order and how many do not?

Sir J. Anderson: All chief officers of police were asked to report any significant increase in drunkenness or excessive drinking in their districts, and special reports have been called for, as the occasion arose, on specific complaints about particular districts, but no chief constable has so far suggested that there is a need for a no-treating order. I have not heard of any complaints of treating of members of His Majesty's Forces while they are hospital patients.

Lieut.-Colonel Sir Thomas Moore: Is it not much too expensive to get drunk in these days?

SPECIAL CONSTABLES (LICENSED VICTUALLERS).

Mr. Tinker: asked the Home Secretary whether he is aware that a number of licensed victuallers offered their services as special constables and were duly sworn in and enrolled, but have since been told they cannot be accepted because of a regulation which debars members of their trade for this duty; and will he give consideration to see whether it can be re moved and the licensed victuallers be placed on the same footing as other citizens?

Sir J. Anderson: No regulation to this effect has been made, but I am advised that a special constable is debarred by Section 35 of the Licensing (Consolidation) Act, 1910, from holding a justices' licence.

Mr. Tinker: Surely the right hon. Gentleman will be aware that we are at war now and want to utilise the services


of citizens to the best advantage, and why should these citizens be excluded from doing the best they can for the country?

Sir J. Anderson: I confess that I have a good deal of sympathy with the point of view put by my hon. Friend, but in view of the many opportunities of public service which are now available, I doubt whether a Defence Regulation for the removal of this particular disability, which is imposed by the ordinary law, would be justified.

Mr. R. Gibson: Will the right hon. Gentleman see that a reason is given in general for the refusal of an application to become a special constable?

Sir J. Anderson: That is a different question.

AMAZONS' DEFENCE CORPS.

Sir Ernest Bennett: asked the Home Secretary whether the members of the Amazons' Defence Corps are accorded permits for carrying rifles?

Sir J. Anderson: According to my information no applications for permits have been received from members of this organisation.

GLASS (PROTECTION).

Major Sir Jocelyn Lucas: asked the Home Secretary, in veiw of the danger from splinter, the relative safety factor of windows treated with adhesive paper strips and those treated with rubber or other translucent solutions; and whether he will prohibit the sale of any solutions that fail to pass a Home Office test, since they vary considerably in their efficiency?

Mr. Purbrick: asked the Home Secretary whether recent information goes to prove that strips of paper and transparent paper gummed over windows are of little use as a means of preventing glass from flying in the case of air raids?

Sir J. Anderson: As I stated on 1st August, in reply to the hon. Member for Duddeston (Mr. Simmonds), recent experience confirms the view of my technical advisers that textile netting or transparent film affixed to the whole surface, and strips of adhesive tape or other strong material give the best protection. Of these, textile netting or transparent film affixed all over the surface of the glass is preferable. Strips of adhesive tape or of

stout paper will give good protection if they are fixed at intervals of not more than six inches. Liquid preparations for painting on the glass do not in all cases give the desired protection and at best they do not usually last long. One of the difficulties of controlling the sale of such preparations is that a certificate of approval could apply only to the sample submitted, but I am considering in what form I can best give guidance to the public on this matter.

Sir J. Lucas: Will the right hon. Gentleman have that information broadcast, because a great many people do not know it?

Sir J. Anderson: I am, as I have said, considering how I can best give guidance to the public.

Mr. De la Bère: Would it be possible to expose sham preparations wherever possible? There are many sham preparations.

Mr. Sorensen: Will the right hon. Gentleman take action against certain manufacturers of paper substitutes that are no use at all for this purpose, some of which I have sent to him recently?

Sir J. Anderson: I am giving the whole matter consideration. It presents certain difficulties.

Sir Irving Albery: Will the right hon. Gentleman consider taking steps to see that a standard preparation is provided?

Sir J. Anderson: There are two difficulties about that. The first is the difficulty of fixing a standard, and the second is the difficulty of seeing that the standard is adhered to in practice.

REGIONAL COMMISSIONERS.

Sir Leonard Lyle: asked the Home Secretary whether Regional Commissioners, in issuing communications of general importance, act on instructions from him or independently?

Sir J. Anderson: Regional Commissioners have been invested with certain powers to meet the needs of the present situation. In the exercise of those powers they act under the general direction and control of the appropriate Minister or in pursuance of authority delegated by him.

AIR RAIDS.

Mr. Lipson: asked the Home Secretary what the civilian population is to do when an aerial combat takes place over a town when no warning siren has been sounded since no all-clear signal is given in those circumstances?

Sir J. Anderson: People who have taken shelter in the circumstances described should remain under cover until they judge from the cessation of air activity that the danger is over.

Mr. Lipson: Is my right hon. Friend aware that children are not in a condition to judge and that the circumstances which I have in mind occur when children are on their way to school and do not know when it is safe to come out? Will he not give some instructions?

Sir J. Anderson: The best answer I can give to that question is that the police and members of the Air-Raid Precautions Services will give all the guidance they can.

Mr. Lipson: Would my right hon. Friend issue a circular to them?

Sir J. Anderson: I will consider whether further instructions are necessary.

PAMPHLET (" NO MUNICH IN THE PACIFIC").

Mr. Marcus Samuel: asked the Home Secretary whether his attention has been called to a pamphlet entitled "No Munich in the Pacific," issued by the China Campaign Committee, suggesting that a spirit of appeasement may materialise again at any moment in Britain's European policy; and what steps have been, or are proposed to be, taken to stop the publication of such a pamphlet as being likely to cause alarm or despondency within the meaning of the Defence Regulations 39BA?

Sir J. Anderson: I have obtained a copy of this pamphlet, but it does not appear to be a publication of the kind against which Regulation 39BA is directed.

Mr. Samuel: Was this not a defeatist document?

Sir J. Anderson: That is a matter of opinion, but the case did not seem to me to require action.

Miss Rathbone: Is it not hard on the Lord Privy Seal to suggest—

Mr. Speaker: rose—

GAS MASKS.

Commander King-Hall: asked the Home Secretary whether he proposes to take any further steps to reinforce his recent appeal to members of the public that they should wear their gas masks for a quarter of an hour each week?

Sir J. Anderson: I propose to avail myself of suitable means of reminding the public of the recommendation which I recently made on this subject, and I hope that hon. Members will give it their support.

Mr. Noel-Baker: Will the recommendation to the public cover all the cases of recent air attacks by the enemy, and will the right hon. Gentleman have it broadcast?

Sir J. Anderson: I shall consider that. I thought it was best to serve up the advice in small doses at a time.

HOME DEFENCE (SECURITY) EXECUTIVE.

Mr. Stokes: aked the Prime Minister whether, in view of the fact that he has added a prominent trade unionist to the Swinton Committee, he is prepared to state the name of that official together with the salary paid to him?

Mr. Austin Hopkinson: asked the Prime Minister (1) what is the name of the trade union leader who has been appointed to the Swinton Committee;

(2) upon what Vote the expenditure of the Swinton Committee is borne;
(3) what remuneration is being received by each of the members of the Swinton Committee?

Mr. Attlee: The Home Defence (Security) Executive, over which Lord Swinton presides, is responsible for the co-ordination of a number of activities in connection with Home Defence, and the Services and other Government Departments are represented on it, and the executive has been furnished with the necessary staff. Lord Swinton was invited to undertake this work by the present War Cabinet and is responsible to the Prime


Minister. The remuneration of the staff and the expenses of administration are borne on the Treasury Vote. Lord Swinton himself, and Mr. Wall—who is the trade union leader referred to—draw no salary. Other officers connected with the executive draw their pay as officers of the Fighting Services or as civil servants. Salaries are paid by the Treasury or by the various Services or Departments to which attached officers belong. As has been stated on previous occasions, it is the view of His Majesty's Government that it would not be in the public interest to discuss the work of the Security Executive; and I have no intention of doing so. The Prime Minister takes full responsibility for its functions and work.

Mr. Stokes: Is the Lord Privy Seal prepared to state what Sir Joseph Ball and Mr. Crocker receive in the way of salaries?

Mr. Attlee: No, Sir.

Mr. Stokes: Why should we not know?

Mr. Buchanan: How is it contrary to the public interest to know the salaries? Why should we not know; we know the men and why should we not know the salaries?

Mr. Granville: Does the Committee report to the Home Secretary or to the Prime Minister?

Mr. Attlee: It reports to the Prime Minister.

Mr. Stokes: Why? Does the Prime Minister pay their salaries himself?

Mr. Hopkinson: What conceivable public interest could suffer from the House of Commons knowing how our money is being spent? Can the right hon. Gentleman assure us that the appointment of Lord Swinton and the other gentleman mentioned are appointments which will give confidence in this secret committee to the trade union movement?

Hon. Members: Answer!

Mr. Attlee: I said that Mr. Wall was a well-known and a highly respected trade unionist having the confidence of those in the trade union movement.

Mr. Hopkinson: Does the right hon. Gentleman think that Lord Swinton is a suitable person for this office?

Mr. Stokes: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible moment.

SECRET SESSIONS.

Sir Leonard Lyle: asked the Prime Minister whether he will investigate the most appropriate means of testing opinion in the House regarding the policy of holding specific Secret Sessions?

Mr. Atlee: The ordinary channels through which Business arrangements are made and the views of hon. Members obtained, still function in spite of the unusual circumstances of the present time. The Government endeavour to meet the wishes of the House as a whole, but it is difficult to please everyone. My hon. Friend is no doubt aware that before going into Secret Session, a Motion must be proposed upon which the House can divide.

Sir L. Lyle: Will the right hon. Gentleman favourably consider the suggestion that an opportunity occurs here to call in the Ministry of Information, in order that they may let loose a flood of mass observers and cross-sectionists in order to experiment in this matter on the House of Commons?

Oral Answers to Questions — AGRICULTURE.

SEEDS.

Mr. Walkden: asked the Minister of Agriculture whether, in view of the impending absence of seeds hitherto supplied by Holland and other Continental countries now under enemy control, he is arranging for adequate quantities to be grown and conserved in the British Isles in readiness for winter and spring sowings?

The Minister of Agriculture (Mr. R. S. Hudson): The seed position is being kept under continuous review, in the light of changing circumstances, and steps are being taken by the National Farmers Union, in collaboration with the seed trade, to increase the supply of seeds grown in this country. In addition, market gardeners, allotment holders and private gardeners, have been advised to leave a proportion of their growing crops,


particularly peas and beans, to mature for seed to meet their full requirements next season.

Mr. Walkden: Will the right hon. Gentleman bear in mind that seed grown in Ireland is a very good change for British soil and vice versa, and will he get into contact with the two Governments in Ireland with a view to obtaining their co-operation in this matter of seed production and exchange?

Mr. Hudson: Ireland is not the only country overseas which sends us seeds.

Mr. R. Gibson: Will the right hon. Gentleman bear in mind that seed from Scotland gives splendid results when sown in England?

GRAIN (PRICES).

Mr. De la Bère: asked the Minister of Agriculture whether, in view of the new price for labour being a fixed and not a maximum price, he will confer with the Minister of Food with a view to making the new grain price a fixed price and not a maximum price, so as to enable farmers to pay the new controlled wages?

Mr. Hudson: The new price of 14s. 6d. per cwt. for wheat of millable quality is a fixed price, and I am satisfied that the maximum prices for oats and barley used for feeding, coupled with the free market for barley sold for malting, will enable farmers to pay the increased wages now ruling.

Mr. De la Bère: Will my right hon. Friend specially bear in mind the case of oats, because of the possibility that they may not reach the maximum price?

Mr. Hudson: Yes, Sir; but with the decrease in the amount of feeding-stuffs available from overseas I think it is very unlikely that the price of oats will fall to a low level.

POTATOES (PRICES).

Colonel Carver: asked the Minister of Agriculture the result of his conference with the Minister of Food regarding the representations made to him since the potato prices were announced, in favour of more adequate remuneration of producers?

Mr. Hudson: I have considered, in consultation with my Noble Friend the Minister of Food the representations which

have been made concerning the prices fixed for potatoes in the Order of 30th July. The Order provides for minimum and maximum growers' prices, the minimum prices being generally 20 per cent, above the average market prices ruling in the corresponding period of 1939. The maximum prices are 10s. above the minimum for each grade. The Order, which applies to the months of August and September only, is an interim measure to regulate the market pending a further Order prescribing schedules of main crop prices throughout the remainder of the season. These will be fixed in accordance with the undertaking given by the Government on 29th June that farmers will be secured an increase in their returns per acre of approximately 20 per cent, as compared with what they obtained for the 1939 crop. The growers will be consulted in regard to the prices for the main crop proper as soon as the yield of the crop can be estimated, and the interim Order does not, of course, prejudice these discussions in any way.

Colonel Carver: Can the Minister say how these prices compare with those of August and September last year, and is he aware that potatoes cannot now be grown at the maximum price of £5 a ton, which is below the cost of production?

Mr. Hudson: I do not think I can accept the view that £5 is below the cost of production, but in any case the prices for August and September are, in fact, 20 per cent, above the market prices ruling last year.

WOMEN WORKERS.

Miss Ward: asked the Minister of Agriculture why he continues to import unskilled woman-power into agriculture through the expensive organisation of the Women's Land Army, while allowing regular women workers to be drawn away from the land through the failure of his Department to ensure them a national minimum wage and then to reserve their services?

Mr. Hudson: I have no evidence that women who were working regularly in agriculture before the war have been drawn away in any considerable numbers. Their wages, like those of men, have in most cases been substantially increased recently. The Women's Land Army was


formed to provide a new source of labour which would not otherwise be readily available to agriculture, and nearly 9,000 of its members are now in regular agricultural employment.

Miss Ward: Is the Minister aware that on the last occasion he said there was no reservation of regular women workers, who are free to go to other work of national importance; and would it not be better to engage regular women agricultural workers to stay on the land rather than introduce new workers under rather expensive machinery?

Mr. Hudson: If the hon. Member has any particular cases in mind and will let me have particulars, I will have them looked into.

DETENTION OF A MEMBER (ADVISORY COMMITTEE).

Mr. Kirkwood: asked the Home Secretary the names of the Advisory Committee which investigated the case of the hon. and gallant Member for Peebles and Southern (Captain Ramsay)?

Sir J. Anderson: The committee was composed of Mr. Norman Birkett (chairman), Sir George Clerk, Sir Arthur Hazlerigg, and Miss Violet Markham.

Captain W. T. Shaw: Is it a fact that my right hon. Friend's Department did not produce a single witness before this tribunal?

Mr. Stokes: The Gestapo did.

Mr. Kirkwood: Should not the constituency in my Question read "Peebles and South Midlothian"?

INTERNEES (DOMINIONS).

Mr. Pickthorn: asked the Home Secretary what assurance he can give that selected classes among the Category C aliens deported to Canada will be at once considered for release and, at their choice, for return to this country?

Sir J. Anderson: I would refer my hon. Friend to the reply given on 6th instant to a Question by my hon. Friend the Member for West Leyton (Mr. Sorensen).

QUESTIONS TO MINISTERS.

Mr. Gallacher: On a point of Order. I addressed a Question to the Minister of Labour demanding or asking for the reinstatement of an industrial worker. The Question has been transferred to the Home Secretary. Has the Home Secretary power to reinstate an industrial worker, and, if not, can the Question be retransferred to the Minister of Labour?

Mr. Speaker: I will see whether that can be done.

Mr. Silverman: ; If this is the right time to raise points of Order of that kind, I would like to raise one. My point of Order refers to Question 142, which is on the Paper addressed to the Secretary of State for War. I handed it in on Monday of this week addressed to the Home Secretary. The Clerk at the Table had some doubt whether it was acceptable and had to resolve that doubt, so that there was some delay. It therefore had to wait until to-day. Yesterday afternoon I was told that the Question had been transferred from the Home Secretary to the Secretary of State for War, with the result that it appears to-day on the Question Paper as Number 142, so that there is no practical possibility of its being asked. According to the practice of this House, could not consent have been sought earlier, so that the Question could have appeared on the Paper on a day when Questions to the Secretary of State for War were likely to be reached and answered?

Mr. Speaker: Would the hon. Member like the Question to be postponed until Tuesday?

Mr. Silverman: Yes, Sir, but that means very much greater delay. Had the consent been sought earlier, an arrangement could have been made for asking the Question upon an earlier day.

Mr. Speaker: On the general question, I can only give the hon. Member the answer which I have given to similar points of Order before, which is that when Questions are handed in they are referred to the Department immediately concerned. This Question appears late on the list because there is such an enormous number of Questions on the Paper.

Mr. Silverman: I do not want to press this matter too long, but as we have got


to the point, which you have just raised, of the Question being addressed to the proper Department, I ought to point out that I did address the Question to the Department which has normally answered such Questions. No information was given to me until yesterday afternoon that it was being addressed to another Department.

Mr. Speaker: I am sorry the hon. Member did not receive the information earlier.

Mr. S. O. Davies: I have been placed in a similar difficulty myself. I handed in a Question on Tuesday, directed to the Home Secretary. No objection was raised at the Table. The Home Secretary had assumed responsibility for all that had happened and that is referred to in my Question, which is No. 143 to-day. I find that my Question has been referred to the Secretary of State for War, after the House has been definitely told by the Home Secretary that he was responsible for what had happened and is referred to in my Question. Members are placed in extreme difficulty. One is loth to believe that a Question has been consigned to the limbo of unanswered Questions in order to avoid answering a question of some importance.

Mr. Speaker: The hon. Member should not make that suggestion. It is obvious that his Question was referred to the Department which appeared to be responsible.

Mr. Davies: But the responsibility has been assumed by the Home Secretary. We have been informed in this House— he has admitted before this House and before the country—that it is his own Department which has been responsible for the tragic blunders which have resulted in my own Question being placed on the Order Paper. It is scandalous.

ARMED FORCES (INCREASE OF PAY).

Mr. Shinwell: (by Private Notice) asked the Chancellor of the Exchequer whether he proposes to take any action regarding the effect on the Armed Forces of increased taxation imposed since the outbreak of war?

The Chancellor of the Exchequer (Sir Kingsley Wood): Yes, Sir. In consulta

tion with my right hon. Friends the Ministers in charge of the Service Departments, I have given consideration to the representations that have been made from time to time regarding the effect on members of the Forces of the additional taxation on tobacco and beer imposed since the beginning of the war, as well as of increased postal and railway charges. In addition, I have borne in mind the increase in the cost of living, which in certain respects also affects members of the Forces.
I have come to the conclusion that in all the circumstances alleviation is warranted, and that the fairest method of according it would be by way of grant of increased pay, as a purely war-time-measure. It is, therefore, proposed to make an increase in pay of 6d. a day to warrant officers, non-commissioned officers and men. With an increase of pay, the sailor, soldier or airman is thus left entirely free to decide for himself to what purpose it should be devoted.
The cost of this additional grant, which will be brought into operation, I hope, at the end of the month, will be in the region of £9,000,000 a year for each million men. With the large numbers at present in the Armed Forces, the House will appreciate that the total cost is considerable, and I think it can well be regarded as a fair and generous settlement of the matters I have mentioned.

Mr. Shinwell: Does the right hon. Gentleman appreciate that his decision will give general satisfaction to the men concerned?

Major Milner: When will the increase come into force?

PERSONAL EXPLANATION.

Mr. Wedgwood: A week ago, the Home Secretary answered a Question of mine, concerning a Jewish refugee in the Isle of Man. With a certain amount of scorn, I asked in a Supplementary Question, whether he was aware that the man had meanwhile been sent to Australia. He has not been sent to Australia. The Home Secretary was right, and I was wrong. I had inexcusably muddled two cases of internees in the Isle of Man. I owe, both to this House and to the right hon. Gentleman, a very sincere apology.

Sir J. Andersons: May I say how greatly I appreciate the right hon. Gentleman's courtesy?

BUSINESS OF THE HOUSE (SUMMER RECESS).

Mr. Lees-Smith: Will the Lord Privy Seal state the business of the House for next week, and whether he anticipates that the House will be able to rise for a Recess?

Mr. Attlee: The business for next week will be:
Tuesday: Conclusion of the Committee stage of the Finance (No. 2) Bill.
Wednesday: Second Reading of the War Savings (Determination of Needs) Bill, and Committee stage of the necessary Money Resolution. As this Bill is being presented to-day, a copy will be available in the Vote Office this evening. Second Reading of the Isle of Man (Customs) Bill. Motion to approve the Potatoes Charges Order.
Thursday: Report stage of the Finance (No. 2) Bill, and we hope that it will also be possible to take the Third Reading the same night.
With regard to the Recess, we must dispose of the Finance (No. 2) Bill, and it would seem that outstanding business will occupy the House until Wednesday, 21st August. This should make possible a short Adjournment, beginning on Thursday, 22nd August. I hope to be able to make a short statement on the length of the possible Recess next week.

Mr. Tinker: Did I follow the right hon. Gentleman correctly when I understood him to say that the Supplementary Old Age Pensions Bill would come up next Wednesday?

Mr. Attlee: The War Savings (Determination of Needs) Bill.

Mr. Granville: Is there a possibility that there will be an opportunity for a discussion on the general conduct of the war, with a general statement by the Prime Minister, before the House rises?

Mr. Attlee: That is a matter which could be considered.

Mr. Silverman: Is there any prospect of the House being able to discuss the effect of the White Paper, recently pub

lished, with regard to internees? We shall have had some experience of the policy, and the effect of that policy will be known before the House adjourns. I think the House would welcome an opportunity of reviewing the situation.

Mr. Attlee: Such a Debate could be taken on the Motion for the Adjournment for the Recess, or it might be well to wait and see how the new committees are working. Perhaps we might have a fuller Debate a little later.

Mr. Wedgwood: Is the right hon. Gentleman aware that the House of Lords have already had a very useful Debate on this question?

Mr. Stephen: Will an opportunity be given to discuss the operation of the Supplementary Grants Bill before the House rises?"

Mr. Attlee: That can be arranged.

ADJOURNMENT.

Motion made, and Question proposed, "That this House, at its rising this day, do adjourn till Tuesday next."— [Mr. Attlee.]

Mr. Hopkinson: I beg to move, to leave out "Tuesday," and to insert "Monday."
The reason for my Amendment is solely this. Apparently, on the programme of business, it is impossible to bring up in Debate certain matters of very great importance. One of the chief troubles in regard to our programme, under war conditions, is due to the fact that sittings of the House are confined to Tuesdays, Wednesdays and Thursdays. Therefore it is very difficult to find time for debate upon things which, ultimately, are at least as important as the ordinary day-to-day work of the House. I mean the rights and privileges of this House, as they have been established for centuries. At the present time they are exposed to the gravest possible peril from time to time. For that reason, I hope that the House will agree to extend our sittings by one day next week, so that we can have an opportunity, after arrangements have been made through the usual channels, of debating to what extent the House is being deprived of its privileges, and to what extent the House is determined to stand out for those privileges, and not to let them be filched away, as


they have been during the last few weeks. The matter is one of importance, and I hope that I may have the support of the House in bringing it forward. The urgency of the question lies in the fact that we have recently set up a new organ in the State which may presumably be of great benefit to the public weal, but, on the contrary, may unscrupulously be used to the very grave detriment of our country in the hour of its need. Unless this House can be kept closely in touch with the activities of that particular body, we shall be putting ourselves into a position of the gravest danger and ultimately bring about a state of affairs, when civil war may be the only remedy for the troubles in which we are involved.
I take it, although I am no historian, that the revolution in this country was due largely to the fact that Parliament allowed a certain person, who shall be nameless, to take more and more upon himself and to deprive this House more and more of its ancient privileges; and that it was due to Parliament allowing this encroachment upon its privileges that a situation arose when civil war and violence was the only means by which our privileges could be re-established. In these days there is, some Members will say a remote risk, but I think, at all events, some risk, of the Executive absorbing such powers and infringing our privileges to such an extent that violence were the only means by which way by which we can regain them. I do not want that peril to be regarded as an impossible one, though I hope it is one very far from us because if it should arise I can say this much—and I think I speak on behalf of many Members here—that I myself will take up arms and be a leader against the usurpation by the Executive of powers and rights which belong to Parliament alone.

Mr. Mander: I beg to second the Amendment.

Mr. Maxton: I do not want to prolong discussion on the Amendment that has been moved by the hon. Member for Mossley (Mr. Hopkinson), but I certainly would like to hear some reply from the Government spokesman before we have to decide how to cast our votes on the Motion before us. I am very ready, as one Member of this House, to come to the House on Monday, if it is desirable,

but another day should be found to discuss the question of the rights of this House. The hon. Gentleman was somewhat vague in his reference to the particular matter that he thought was threatening our rights just now. I gather from his Questions and other references that he is considerably concerned about the committee that has been set up under the chairmanship of Lord Swinton. I share with him equally some of the very grave doubts as to what this body is doing. If the purpose of this body is to nose around among Members of Parliament and to and out their opinions on this, that and the other thing with a view to reporting them to the authorities, then this House—[Interruption.] I am certain that Mr. Speaker can be trusted to get to his feet if I go beyond the Rules of Order. Hon. Members around me are attempting to usurp the rights of Mr. Speaker. I say that certainly interferences of that sort with our freedom as Members of Parliament would be issues about which this House ought to be very much on the alert. I think that the request of the hon. Member for another day when issues of that description and kindred issues could be discussed before this House adjourns, if it is to adjourn, is a reasonable one, and, personally, I should like to hear a reply from the Government on the subject.

Mr. Attlee: I was about to get up to reply when the hon. Member rose. I have listened to the rather cryptic remarks of the hon. Member for Mossley (Mr. Hopkinson), and I had no notice and no request for a discussion of this subject. I should have thought that that was a very inconvenient way of asking for the subject to be raised in this House. Members presumably make their arrangements accordingly if they think the House is coming back on Monday or Tuesday, and the hon. and gallant Member might have raised this matter earlier in order that he might have given Members an opportunity of making their arrangements.

Mr. Hopkinson: I do not think that the right hon. Gentleman is quite fair. I could not possibly raise it until we had had an answer to our Question to-day. I apologise for the shortness of the notice, which was absolutely unavoidable.

Mr. Attlee: I am afraid that I have not quite connected the remarks of the hon. Member, which, I gather, are mainly directed to the point that in certain circumstances he would be forced to lead a revolution. That is not so urgent. If he wanted to lead that revolution by Monday next, it would have been better to have discussed the question. This Government has again and again pointed out to Members of the House that it is desired that the House should have the fullest opportunity of discussing subjects, and it is our constant endeavour to find out—and it is not always very easy—what any considerable number of Members want to discuss. This matter can be discussed through the usual channels. [An HON. MEMBER: "What are the usual channels?"] The usual Whips and the Leader of the House. I should have thought it would be extremely inconvenient for most of the Members to have an alteration, unless the hon. Member thinks that he must take action by next Monday. I should think that he would have had a better House for whatever he wishes to discuss if he arranged in the ordinary way that time should be provided. There is no intention whatever on the part of the Government that an opportunity should not be given for discussing anything that this House thinks it right to discuss.

Mr. Hopkinson: I beg leave to withdraw the Amendment, on the understanding that I myself may be regarded as one of the usual channels.

Mr. Attlee: The hon. Member cannot himself be a channel. After all, there is an entrance and an exit, and surely, if he is to be effective, he must make contact in some way or other with some representative of the Government.

Mr. Hopkinson: Perhaps it will save the time of the House if I withdraw the Amendment on the chance that I may be able to communicate with the Government Whips. I should, however, before I sit down, just draw the attention of the House to the fact that this is a serious matter and that silly facetiousness such as we have heard from the Front Bench is entirely irrelevant.

Amendment, by leave, withdrawn.

Main Question put, and agreed to.

Resolved,
That this House, at its rising this day, do adjourn till Tuesday next.

BILL PRESENTED.

WAR SAVINGS (DETERMINATION OF NEEDS) BILL

"to make provision as to the treatment of war savings in connection with unemployment assistance, supplementary pensions and financial assistance to blind persons," presented by the Chancellor of the Exchequer; supported by Mr. Ernest Brown, Mr. Malcolm MacDonald, Mr. Bevin and Captain Crookshank; to be read a Second time upon Tuesday next, and to be printed. [Bill 80.]

NATIONAL EXPENDITURE.

Tenth Report from the Select Committee brought up, and read; to lie upon the Table, and to be printed. [No. 155.]

Eleventh Report from the Select Committee brought up, and read; to lie upon the Table, and to be printed. [No. 156.]

Ordered, That a Message be sent to the Lords to request that their Lordships will be pleased to give leave to the Lord Lloyd of Dolobran to attend to be examined, as a Witness, before the Sub-Committee on Home Services, appointed by the Select Committee on National Expenditure.—[Mr. Silkin.]

MESSAGE FROM THE LORDS.

That they have agreed to,—

Consolidated Fund (Appropriation) Bill,

Workmen's Compensation (Supplementary Allowances) (No. 2) Bill, without Amendment.

Orders of the Day — FINANCE (No. 2) BILL.

Considered in Committee.

[Sir DENNIS HERBERT in the Chair.]

Clause 1 ordered to stand part of the Bill.

The Chairman: I take it that the Committee will consent to the usual course and that I should call the numbers of the Clauses, when there are no Amendments on the Order Paper, one by one and then put those Clauses en bloc, unless any hon. Member interrupts me when I call a particular Clause.

Hon. Members: Agreed.

Clauses 2, 3 and 4 ordered to stand part of the Bill.

CLAUSE 5.—(Entertainments.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

4.41 p.m.

Mr. Denville: I view with horror the method by which this Clause has been introduced into the Finance Bill. Only a few moments ago we were discussing the Privileges of this House, and I would point out to the Chancellor of the Exchequer that, in regard to the Entertainments Duty, the information was known outside this House long before hon. Members knew that there was to be an in creased imposition on the living theatre. Certain parties were consulted, and it was within the knowledge of the Chancellor of the Exchequer or his office that in this House there is a Parliamentary Committee which has been dealing with this matter for a long time, the chairman of that Committee being the hon. and gallant Member for West Birkenhead (Colonel Sandeman Allen). The Parliamentary Committee were ignorant of the proposal. They have not been consulted and there has been nothing done in the matter. It is not that we expect hon. Members of this House to be consulted with regard to taxes that are to be imposed. It would hardly be fair. At the same time—

4.42 p.m.

Whereupon The YEOMAN USHER OF THE BLACK ROD being come with a Message, The CHAIRMAN left the Chair

Mr. SPEAKER resumed the Chair.

Orders of the Day — ROYAL ASSENT.

Message to attend the Lords Commissioners.

The House went; and, having returned—

Mr. SPEAKER reported the Royal Assent to:

1. Appropriation Act, 1940.
2. Workmen's Compensation (Supplementary Allowances) Act, 1940.

Orders of the Day — FINANCE BILL.

Again considered in Committee.

[Sir DENNIS HERBERT in the Chair.]

CLAUSE 5.—(Entertainments.)

Question again proposed, "That the Clause stand part of the Bill."

4–53 P.m.

Mr. Denville: I was saying that there was a Committee set up in this House under the chairmanship of the hon. and gallant Member for West Birkenhead and on which there were 400 signatories, hon. and right hon. Members. They were ignored, and the only thing we have learned about this tax is that when it goes on it will never come off. It is rather disconcerting and lowers one's pride when one feels that a large body of Members of this House are treated like school children and are not consulted at all. One realises that there is a war on and that certain taxation must be put on to win that war, but why put it on something that will do more harm than good to the war effort? In other words, if this tax had not been put on, and the Treasury had accepted a scheme put forward by certain hon. Members of the House and those connected with the theatre industry, a much larger sum would have been raised than the amount of £250,000 which will be received from the tax on horses, dogs and actors. I dare say the right hon. Gentleman the Chancellor of the Exchequer has in mind what I mean when I say that the industry approached him


to show how no less than £3,000,000 could have been obtained out of the theatres and living entertainment, but instead of getting any encouragement there was no reply whatsoever, and the whole scheme was dropped.
To-day we have a big theatre, the London Hippodrome, giving two weeks' takings to the Treasury for the war effort, and that is a point I have tried to make. Large theatres can find the money, but the smaller ones cannot. The little theatres, by this increase of £4 or £5 a week, will be put out of commission altogether. This is a rotten tax, and I am sure the majority of the Members of this House agree. The right hon. Gentleman may smile, but I do not think he will get 5 per cent, of Members here to say they are not in favour of the tax being taken off altogether. But this is war-time, and we are not pressing for it. We want to help the Government, but in the right way, and I make the offer to the Chancellor of the Exchequer, here and now, on behalf of one or two managers of theatres, that we could raise no less than £3,000,000 without this tax. We raised, in a small theatre not far from London a week or two ago, between £300 and £400 as a trial trip, but despite this the whole scheme has been abandoned. All we can hope for is that this is not a permanent tax, although an official said it would not be taken off, and I would like to know who gave him the authority to say that. I beg the Chancellor to temper justice with mercy and think of the little man whom he will crush out of existence. Why should we let the large theatres in London get away with a small tax which will not hurt them and the little theatres in the provinces suffer?
I said in this House a few years ago that if the Entertainments Duty was reduced, new theatres would be built and old ones reopened. That has happened, but now along comes this iniquitous tax and out of business they go again. The Committee will hardly believe it when I say that in towns like Chesterfield and Wigan, and other places of that description, this extra £4 or £5 a week will make a great deal of difference. In many cases it will mean the difference between profit and loss and between keeping open and shutting. I hope the Chancellor will be

able to tell us that this tax is a wartime measure—that is all I am asking to-day—and that when the war is over the duty will be taken off. The tax on the living stage must be a small proportion of the receipts from dog racing, horse racing, football matches and so on, and I would suggest to the Chancellor that he ought to devise a scheme by which theatres taking a certain amount of money should pay the larger tax. I say: Let all theatres pay their salaries and their expenses, and let the Government take the lot afterwards. All we want is a fair crack of the whip. All I have to say to the right hon. Gentleman is, Shall we have it?

5.0 p.m.

Mr, Kenneth Lindsay: I am not going to press this at the moment, but I should like to know what the figure is out of the £250,000, and I should like to ask this: The Treasury at present are subsidising, through an organisation known as the Committee for the Encouragement of Music and Arts, and the Board of Education, a sum of money given originally by the Pilgrim Trust. One of the activities of that committee is a touring company in which Miss Sybil Thorndike and others will be acting, and I think they are proposing to go to South Wales and some of the industrial districts with Shakespearian and other performances during the autumn and afterwards. Will these be exempt from tax, because otherwise the Treasury will be subsidising with one hand and taxing with the other?

5.2 p.m.

The Chancellor of the Exchequer (Sir Kingsley Wood): We all know my hon. Friend's interest and long standing in connection with this matter, and I can quite understand his anxiety as regards the effect of a tax of this kind. The increase in the Entertainments Duty will produce altogether about £4,000,000 in a full year and about £2,000,000 during the present year. The full scale of duty will fall on cinemas, horse racing, motor cycle racing and other sports, and the reduced scale applies to certain entertainments defined by Act of Parliament. The only matter that I have been asked about today is as far as the lower rate of duty is concerned in connection with what is called the living theatre. No Chan-


cellor of the Exchequer could say that certain taxes would be remitted after the war. Equally no Chancellor of the Exchequer could say—I think my hon. Friend misunderstood the position—that they are to remain on for all time. I hope conditions may be such that we may in due course be able to mitigate taxes of this kind, because it is a matter of regret that the theatre particularly should be affected in this way. I should like the Committee to know that we did consult, confidentially with a very representative body of the living theatre, the Stage and Allied Arts League, and that incorporates the Society of West End Theatre Managers, the Theatrical Managers Association, the Entertainments Protection Association, the Association of Touring Managers, the British Actors' Equity Association, the National Association of Theatrical Employés, the Musicians Union, the Old Vic and Sadlers Wells Theatres, the Shakespeare Memorial Theatre, and so on—a very representative body of people. They have recently communicated with me and have said, after careful examination, that they agreed to the new scale, and the representative acting on my behalf was told by them that the industry would accept the scale and they raised no objection at present in view of national needs. That is the way this body approached the matter. Others are contributing, and in present circumstances it is right that they in their turn should make their contribution, and they have made it in that spirit. So far as Miss Sybil Thorndike's tour is concerned, I am not quite aware of it.

Mr. Lindsay: They are charging 3d.

Sir K. Wood: I will inquire into the position. This is regarded by the theatres as the contribution that they are making to the national need. In the circumstances the Committee may be content to accept that contribution in the spirit in which it is made.

Mr. Pethick-Lawrence: The Committee is accepting this proposal in view of the national need, but I am sure the Chancellor of the Exchequer will not take it that, because there is no opposition in the form of a vote, that gives him an indefinite right on future occasions to go on putting up the tax during the war.

Question, "That the Clause stand part of the Bill," put, and agreed to.

Clauses 6 to 10 ordered to stand part of the Bill.

CLAUSE 11.—(Assessment and collection of tax under Schedule E.)

5.8 p.m.

Sir William Davison: I beg to move, in page 7, line 15, to leave out "assessment and."
This Clause deals with the collection of tax by employers and its payment over to the Treasury. It, however, makes a. new provision as to the assessment of tax by a Government Department. It provides:
The Commissioners of Inland Revenue may by regulations make provision for the assessment and collection of tax chargeable under Schedule E, including in particular provision for requiring employers and other persons to deduct any tax so chargeable from any payments made by them (being payments of or on account of income which is chargeable with tax under that Schedule), and for making them accountable for any tax which they are so required to deduct; and any such regulations shall have effect notwithstanding anything in the Income Tax Acts.
I think that taxpayers generally will approve the provisions of the Clause so far as they relate to deduction of tax from salaries chargeable under Schedule E, but I am bound to point out the possibility of a serious change being made in the law governing the assessment of Income Tax as laid down by the Income Tax Act, 1918. The proposal made by the words which I propose to omit cuts at the whole root of the Income Tax system which has been so successful since it was first introduced about 100 years ago, under which the taxpayer is assessed and his tax collected by a body of fellow taxpayers and not by a Government Department. This Clause opens wide the door for fundamental changes of such very wide implications that I think it very likely that the Committee have not fully realised their seriousness and what may be their extent, even though it may not be the Chancellor's present intention to put them into force. Protests have often been raised against legislation by reference. In this Clause an even worse principle is introduced, especially in a matter of this kind. It is legislation by Regulation. It is the more to be deprecated because the House of Commons will not have an opportunity of considering these Regulations, which


may materially change the present administration by the General Commissioners and their overseers. A circular was issued on 2nd August, "7a, 1940," to Commissioners of Taxes which bears that out, and points out that assessments are to be made by these officials rather than by the Commissioners. If these two words are retained, the Clause will really give a blank cheque to a Government Department. It is of no immediate importance, because the assessment throughout the country has already been agreed upon for the current year. The Committee are in agreement with the underlying idea of the Clause, but I hope they will not think it right that a change of this very great extent should be introduced into our Income Tax law, which has worked so satisfactorily and has been the envy of all other States in the past.

5.14 p.m.

Mr. Woodburn (Stirling and Clack-mannan, Eastern): The proposal in this Clause probably follows to some extent the suggestion that I made to the Chancellor of the Exchequer in a former Budget Debate. Therefore I should be very sorry if the Clause as drafted was to wipe away some of the safeguards which were provided by former Income Tax Acts. As the Amendment is to some extent to cover the same purpose as an Amendment that I have down, to leave out the last part of the Clause, I support the hon. Member in his plea to the Chancellor that he might give us an assurance that the Clause will be redrafted in such a way as to safeguard the present position. According to advice which I have received, this Clause would give power to the Income Tax authorities to make provision for the assessment and collection of tax, and if the Clause were passed, it might be used to take away the powers of the local Commissioners of Income Tax. While the Chancellor and his Department probably have no intention of doing that, we know that once a thing is in an Act of Parliament, good intentions count for nothing when the matter comes before the courts. Therefore, I feel that before this Clause is passed we should ensure that something is inserted to safeguard the position and guarantee the status quo as far as the Commissioners of Income Tax are concerned. I am satisfied that it is not the intention of the Treasury that the Clause should have the effect which I have

mentioned, and I should be glad to have an assurance from the Chancellor.

5.16 p.m.

Sir K. Wood: I am glad to have an opportunity of making this matter clear. All that the Clause says is that:
The Commissioners of Inland Revenue may by Regulations make provision for the assessment and collection of tax.—
Although I will examine the matter, in view of what has been said by my hon. Friend the Member for South Kensington (Sir W. Davison) and the hon. Member for East Stirling and Clackmannan (Mr. Woodburn), the intention of the Clause is quite plain as far as we are concerned, and it does not make any new provision or any revolutionary change. There is no question of making any alteration, or in any way putting an end to the work of the Commissioners of Income Tax.

Mr. Woodburn: I think the right hon. Gentleman will agree that the words "make provision" may mean the making of any provision, such as a provision for taking away the existing provisions.

Sir K. Wood: The draftsmen did not take that view, but I will examine the matter.

Sir W. Davison: The last words in Subsection (1) of the Clause—"notwithstanding anything in the Income Tax Acts" are very disturbing.

Sir K. Wood: I propose to say something about that before I conclude my remarks. In the first place, the assessments under Schedule E will continue to be signed by the local Commissioners of Income Tax, who will also continue to deal with appeals against assessments. What is really in mind, and what is, in fact, stated in the circular which my hon. Friend quoted, concerns another matter of a very minor character. The position is this. As a preliminary to the making of the assessments, there is a mass of detailed work, largely of a clerical nature, which must be disposed of, and at the present time this work is done partly in the offices of the Inspectors of Taxes and. partly in the offices of the clerks to the Commissioners. We are apprehensive that this may tend to delay, and there must be no delay in this particular matter; it is of great importance that the work should be coped with in the limited time available. Therefore, it is necessary to


make arrangements to secure that the detailed clerical work is concentrated as far as possible under a single authority. Under the existing law, the clerks to the Commissioners are responsible for a great deal of this clerical work, and to effect the necessary concentration of the work there must be powers to enable the Inspectors of Taxes to deal with it. That is the whole idea. It is purely a matter of internal arrangements as far as the necessary preliminary work is concerned. With regard to the last part of Subsection (1) of the Clause—
and any such regulations shall have effect notwithstanding anything in the Income Tax Acts "—
it will be remembered that under the new provisions the tax will be deducted weekly or monthly, as the case may be. It is necessary, for example, to have this phrase in the Sub-section because otherwise there would be on the Statute Book a provision saying that Income Tax shall be payable on 1st January and 1st July, which obviously would not be in accord with the new provisions. That is the meaning of the last words. I will, however, ask my right hon. and learned Friend the Solicitor-General to have the drafting of this Clause looked at again, in view of the criticisms that have been made, in order to see whether it is necessary to make the matter any plainer than it is.

Sir W. Davison: I am obliged to my right hon. Friend. If he will have the drafting looked at again, it will relieve anxiety. It should be possible to insert some words to show that it is not proposed by this change in the method of collection of war taxation to make any change in the century-old method of Income Tax procedure. In view of my right hon. Friend's assurances, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question, "That the Clause stand part of the Bill," put, and agreed to.

CLAUSE 12.—(Disallowance of certain payments in respect of war risks.)

5.22 p.m.

Mr. Woods: I beg to move, in page 8, line 38, at the end, to insert:
(iii) any mutual aid or insurance scheme to enable business, or industry, in the event of war damage, dislocation or other hindrance

arising from the war, to continue to function, where such mutual aid or insurance scheme has the approval of the Treasury.
While the ingenuity of people in another country is devoted to designing secret and other means of destroying this country, there are some unpatriotic people here who are so concerned about their financial interests as to apply ingenuity to the problem of evading Income Tax. Evidently, the higher the Income Tax, the greater becomes their ingenuity. Certain people want to exploit the present war condition by devising subtle schemes in connection with war risks which enable them to make profits out of the tragedy of war. I feel sure that the whole Committee is glad that a serious attempt is being made to prevent such ramps, but while everybody hopes that effort will be successful, it is well to remember that it is possible to destroy the good with the evil. One of the most remarkable demonstrations of the good will of the people of this country is the spirit of mutual aid and helpfulness which has been revealed by the contingencies of war. That applies to business life as well as to civilian and Army life. In the past it has been recognised by every Chancellor and every Government, I think, that wise insurance against definite risks should be encouraged, and there has been a willingness to recognise as a legitimate business expense provision against losses by fire, and so on. At the present time, the risks to certain businesses and industries are very considerable, and in certain areas there is greater danger of loss, not only of stocks but of the whole business, as a result of enemy action or other circumstances arising out of the war.
I agree that this position should not be exploited, but at the same time I feel that some provision should be made so that business and commercial interests may be able to make provision against such losses and treat the expense incurred as a definite business expense. Let me refer to the situation in which certain business interests will find themselves. In one area, there may be a considerable risk of destruction, as indeed in many areas there has already been some destruction of business; whereas in another area there may be far less risk. The risk to a business which has concentrated the whole of its assets in the first area is far greater than the risk to a business in the second area. In the


case of a small private trader, his chief competitors will be multiple concerns, and while the small private trader will be in fear of losing everything, the big multiple concern will have within its ramifications an insurance scheme of its own, because if its business in one area is destroyed, it will be able immediately to bring stocks from other depots, and as a matter of fact, it will be able to exploit the position created by the destruction of a small competitor or competitors. I do not think the Government and the Chancellor would desire that such a position should be created.
The difficulty arises as to how the situation can be met. I suggest in the Amendment that the Chancellor should have complete power to control all such schemes. It may be asked what sort of conditions would have to be imposed before approval was given for such a scheme to be recognised by the Commissioners as being a valid expense. I will suggest a few conditions, from which I think the Chancellor will see that it is not my desire to rob him of any money, but rather to increase his revenue, probably. First, the Chancellor could lay down a condition that such schemes should be on a non-profit basis and that they should not be instituted to exploit the perils and anxieties of business people or commercial concerns. Secondly, he could provide that he would approve of a scheme only when he or his officials were satisfied with regard to the credentials to the board or trust administering the fund. This would give him complete control. Thirdly, he could further extend his control by saying that he would approve of no scheme where the contributions exceeded a certain percentage of the turnover of the business— say, one-half of 1 per cent.—and he could also lay down conditions with regard to the administrative costs of the scheme, so that there would be no chance of fat incomes for the directors, and there would be a very definite restriction on any remuneration and even on expenses attaching to the administration of the scheme.
Fourthly—and most important of all to the Chancellor, I think—he could say that the payments in such schemes must all go to him and that he would be the custodian of the funds. The right hon.
Gentleman knows that already certain schemes have been propounded which would add very considerably to his revenue if he laid down such a condition. There would have to be a special fund. As far as I know, the present loans would not be suitable, but if he made a special scheme of investment in which the rate of interest did not exceed 1½ per cent., for instance, he would be in a position to receive the bulk sums and make repayments in very much the same way as they are now made in connection with Saving Certificates. By these means, he could obtain a very considerable revenue and hold the money for the benefit of the people concerned. Incidentally, some of the concerns might say that the whole of the sum should be handed to the Chancellor, who would be acting as custodian, free of interest, or at any rate without a rigid adherence to the maximum interest, whatever it might be.
If there were millions paid into such a fund, the Chancellor could make arrangements whereby a redistribution to the contributors of the sums contributed would be minus Income Tax at the full rate. Such a scheme with these conditions could be available for all kinds of organisations. Nearly every industry has a national organisation, such as those of the drapers and grocers, and, I believe, such a scheme would be suitable for electricity undertakings. I suggest that by accepting this principle nothing would be given away. Up to the present the Government have accepted responsibility for insurance schemes in regard to stocks, but in the case of a drapery concern, in the event of enemy action the fittings, which are of considerable importance, and the premises may also be destroyed. Unless the Government are prepared to institute a wider scheme, I suggest that this would alleviate the situation for the time being, and I hope the Chancellor will give favourable consideration to it.

5.32 p.m.

Mr. Levy: I wish to support this Amendment, but I want to approach it from a different angle, and to put one or two considerations before the Chancellor in regard to it. I am speaking for, and with the authority of, the Joint Committee of Electricity Supply Associations and the Joint Conference of the Public Utility Associations, which include electricity suppliers for the whole of the country. The Chancellor knows that they


are formulating a scheme whereby, in the event of any damage being done by a bomb or anything else arising out of the war, such damage could be repaired during the war out of a pool, in view of the fact that any compensation for damage would not be recoverable from the Government, if, indeed, it were recoverable, until the end of the war. They are proposing by means of legislation to create a pool by a levy on the whole of the industry. Under this Clause, that levy, which ordinarily would form part of expenses and could be assumed in the same sense as an insurance premium against catastrophe, would be disallowed. I do not think that is the intention of my right hon. Friend. I am not asking him at this stage to make up his mind. What is suggested by the executives of these two large organisations is that he should receive a deputation which would explain to him the position with regard to this levy and how it is intended it should operate, and to see whether he could make it an expense in the form of an insurance premium instead of coming to the conclusion right away that it should be disallowed. In the circumstances the observations I have made in regard to these large electricity undertakings may meet the point of the hon. Member for Finsbury (Mr. Woods), but so far as I am concerned I would not take the matter to a Division.
All that I ask is that my right hon. Friend should consider it between now and the Report stage, and, in particular, that he should consider whether he will agree to receive a deputation from these large industrial organisations with regard to this matter. It would require legislation to give effect to it. The Treasury would have to give their approval with regard to the method of these levies and how they should be dealt with. In these circumstances it would still be under the control of my right hon. Friend. Perhaps these premiums, if I may call them so, could come within the categories of expenses of these undertakings instead of being disallowed.

5.34 p.m.

Sir Joseph Lamb: I wish to support the Amendment and to ask a question in doing so. Agriculturists have a farmers' mutual insurance. Supposing they insure their cattle and stock against war risk, will they be allowed to deduct

the premium from their accounts for Income Tax purposes? Will it be necessary for mutual insurance companies or any other companies to apply for specific powers from the Board of Trade, or will it be a charge automatically placed on the account?

5.35 p.m.

The Financial Secretary to the Treasury (Captain Crookshank): I should like to disabuse the mind of the hon. Member for Finsbury (Mr. Woods). He believed this Clause dealt with evasions and ramps on the part of the taxpayer. That is not at all the reason for the Clause. I should like to say how it came about that this Clause is necessary. The hon. Member, in moving his Amendment, pointed out that Parliament had before now considered it right that there should be Income Tax allowances, to use his own words, "for insurance against definite risks." It is just because the kind of schemes which this Clause deals with are not in any way insurance against definite risks that the matter has arisen. These schemes which have been set up for some time past, perhaps rather more since the war than before it, are, as I understand it, schemes by people acting independently, or, as he suggested, particular types of business who pay premiums into a fund out of which there will be payments made according to the terms of the different prospectuses. Either there will be compensation at the time of the damage or else the "kitty" will be divided up when the war is over according to what has been put in up to the time of distribution. Claims could only be met to the extent that funds were available for the purpose. In other words, these schemes have nothing to do with insurance as such.
The Committee will remember that this matter has been before Parliament several times, and the decision the Government have taken is that within the limits which may arise they will pay compensation for war damage. There is a White Paper about it and we have had Debates on the subject. Therefore, the nation has assumed the burden. Here mutual indemnity companies or associations set out to find what their position is under the existing law with regard to Income Tax, and we are advised that unless an amendment to the law is made, as is proposed, payments


by individuals to such indemnity funds are permissible as deductions for Income Tax. That is the law, and it is because we do not think in present circumstances that it is right that we are proposing this Clause to the Committee.
Let me give the reasons why. It is admitted by the hon. Member for Fins-bury, and in this I am speaking a little wide of his Amendment, that these schemes—and of course his Amendment specifically deals with a plan to enable businesses to continue to function, and it is inherent in that that compensation will be paid to the individual business to enable it to function—have nothing to do with insurance. Then we get to the position that the State agreed, and the announcement was made in the House, and in the White Paper it was reaffirmed that all the insurance world considered war damage was not an insurable risk. Therefore straight away we are outside the field of insurance. But we have now a 100 per cent. Excess Profits Tax, and if we allow these payments to be deductible we may get to a stage where a group of firms, possibly in one particular industry, could make a mutual indemnity scheme and vote out of their own incomes whatever they liked into that fund. Because it would be deductible, if we did not have this and the other Clause in the Bill, it would in fact be done at the expense of the State. Therefore those particular undertakings which took advantage of that provision would first of all be getting the advantage of not having to pay Income Tax because these premiums were deductible, and, secondly, they would also share as part of the community in whatever scheme there was for compensation in respect of war damage to property at the end of the war. And so they would obtain a double benefit.

Mr. Woods: I do not wish to see the time of the Committee wasted. We are entirely agreed on this point and on these difficulties. If these businesses go out of business the Chancellor will get nothing from them, but if the power is given to the Treasury he can lay down conditions whereby all these clever dodges suggested by the Financial Secretary to rob us collectively could be avoided.

Captain Crookshank: I am sorry if I have been too long in giving the reasons

for this Clause, but it is the same point as that of the hon. Member. I was trying to prove that none of these schemes should get any advantage, in the taxation field. The hon. Member tells us about credentials, and the Chancellor of the Exchequer holding contributions, that the scheme should be on a non-profit basis, and that the Treasury should give its approval to its being taken out of this-Clause and given the same exemption as we give to insurance schemes. But this would be an extraordinary power for this House to give to the Treasury. It would be a dispensing power that the Treasury should decide, on any particular mutual scheme, whether or not it came within such ideas as the Treasury has and whether or not it should get taxation benefit. That would be a power which most hon. Members on reflection would be unwilling to give to the Treasury, and, to do my right hon. Friend justice, it is not a power which he wishes to have.

Mr. Levy: I have put it in this way. The Treasury are the taxing authority, and since a scheme, such as I outlined, which is being inaugurated, would require legislation and the approval of the Treasury, surely it is not outside the wisdom of the Treasury before they decide on what is being asked in the Amendment to receive a deputation instead of turning it down straight away.

Captain Crookshank: I cannot answer two hon. Gentlemen at once. I was answering the hon. Member for Finsbury (Mr. Woods). I was saying that the effect of this proposal would be to give the Treasury dispensing powers to decide whether a scheme fell within certain standards which the Treasury would lay down, and, if they so decided, that scheme would get a benefit over other schemes in the taxation field. I am sure that hon. Gentlemen would not wish the Treasury to have that power and my right hon. Friend himself would not wish to have it. The hon. Member for Elland (Mr. Levy) asked about a particular scheme dealing with the electricity industry. As I understand from the information that we have, this scheme has not yet been formulated. It is, therefore, difficult, in fact impossible, to say how it might or might not be affected by this Clause. If the scheme which was outlined at a discussion which took place a little time ago is now formulated on the


lines then proposed it certainly would constitute an arrangement such as we are trying to exclude from taxation advantages by this Clause and payments under that scheme would not be allowable for taxation purposes. The scheme may have been modified since then, so that I cannot make a pronouncement about it. With regard to the question of my hon. Friend the Member for Stone (Sir J. Lamb), I again hesitate to give an ex cathedra statement about a particular scheme. As I understood it from his description, it did not seem to me to be one from which you could deduct premiums for taxation purposes.

Sir J. Lamb: It is not a scheme which it is proposed to bring forward, but an insurance company which has existed for a long time and is confined to agriculture. I want to know whether, if a person insures his stocks, crops and buildings against war risks he can secure tax deduction in respect of the premium.

Captain Crookshank: I cannot answer off-hand about one particular scheme. Fundamentally, the point at issue is whether the scheme is a real insurance scheme or whether it is a mutual indemnity scheme. There always has been provision for dealing with regular insurance schemes which deal with insurable risks, but it does not matter whether the plan is in existence now or is to come into existence, because this Clause is designed to catch some which have grown up in the last few months. They are not insurance schemes in the accepted sense of the word because they do not deal with insurable risks.

5.50 p.m.

Mr. Barnes: With regard to the comment of the Financial Secretary about the power which this Amendment might place in the hands of the Treasury, I would like to point out that the Amendment has been submitted for the purpose of raising a discussion on an important problem which has developed and is in its initial stages. If we can make out a case for consideration, I hope that the Chancellor and the Financial Secretary will not decide the issue to-night on the words of the Amendment, but will listen sympathetically to the problem we wish to submit to them. The Financial Secretary denies that the Clause is to deal with evasion of tax, but the

only illustration he used dealt with that issue, in so far as he pointed out that now that Excess Profits Tax is levied at the rate of 100 per cent., it would be possible, unless the Chancellor were armed with powers of this description, for a group of firms to get together and devise some scheme of mutual assistance and use it as a means to put sums into reserve and fix premiums at a heavy rate for the purpose of escaping taxation.
I want to make it plain that those of us who are raising this issue have no desire to weaken the powers of the Chancellor in that regard. We feel that the Treasury and the Government are justified in protecting themselves against any movement of that description. I do not believe that in present circumstances reputable and public organisations, whose accounts are subject to public audit, could get away with that, and we on our side would not support any provision in the Finance Bill that would lead to-evasion of legitimate taxation obligations. I trust that the Committee will not discuss this problem from that angle, but will view the problem in its wider aspects. It is connected with the decisions of the House in the early stages of the war. When we were discussing legislation to cover war risks I urged that we should follow the procedure of the last war, under which the Government assumed the responsibility of a compulsory system of insurance covering all property. The President of the Board of Trade argued that it was impossible to assess the damage that might arise from aerial warfare, and that any premium would be so heavy and the risks so incalculable that it was not comparable with the circumstances of the 1914–18 war. Everyone recognised the force of that argument, but my own view was that it would have been wise for industry and property owners to have accepted a heavy premium rather than face the impossible position which exists now, in which persons who-have their property, shops or businesses destroyed should wait to see what the compensation would be after the war.
That means that any compensation after the war is exceedingly indefinite, and the longer the war goes on the greater the problem will be of dealing with compensation, whether for the individual or the business after the war. What situation is that creating in a large


number of related bodies or organisations? Although for the moment we are putting this forward as a problem of the Cooperative movement, it is not limited to that organisation. There are to-day bodies of people associated together in business and other interests which develop a common concern for what happens in one part of the business. The thing works out very inequitably. In a common responsibility of this description, if it is in an organisation that has a centralised machinery of control, it can deal with this problem easily and adequately; but in an organisation in which there is a measure of local autonomy in an area affected by war restrictions, war zoning or aerial attack, the principle of pooling the risk cannot operate.
1 will give an illustration. I have two Co-operative organisations in mind. One is a large organisation, part of whose area of operations is a zone affected by the Defence restrictions. Nearly 75 per cent, of the trade of the town has disappeared, owing to people leaving and a variety of other circumstances. Because that town forms part of a larger organisation, the organisation is able to bear the impact of that situation. I know a similar organisation in a seaport town which is autonomous to that town. Its prosperity and financial stability have been practically destroyed. That applies to individual businesses as well. There might be a retail trader in that town whose business is destroyed, but the branch of a company organisation which is destroyed can absorb the shock of that dislocation and loss. In circumstances of this kind, when the House and the Government have not accepted the responsibility of a national insurance scheme, related organisations are developing an admirable spirit. It is part of the strength of this nation at the moment that there is a desire to spread burdens so that any person or business struck down should not be left isolated. If the Government are not prepared to carry the responsibility of a national insurance scheme, this Committee, through the Treasury, ought to be prepared to devise some machinery whereby co-operative efforts—co-operative in the wider sense— can be brought into operation in order to avoid the disaster which falls on a

large section of the community through no fault of their own. I ask the Chancellor to admit the justice, equity and moral foundation of our case and to recognise that what we ask him to do will strengthen the fibre of resistance in the community.
I should like to quote another case. In certain restricted areas a number of garages have been closed down compulsorily for military reasons, not from the point of view of the danger in aerial bombardment, and there has been no compensation. Many individuals have put their life work into building up those little businesses. It is all very well for the Financial Secretary to say that these cases will be treated from the point of view of compensation in a "by and large" way after the war is over. Meantime the trade has been compelled to develop voluntarily a system of compensating the owners of those closed garages on the basis of the amount of petrol sold in the appointed garages which have been left. That has been done on a voluntary basis and, I understand, has received the approval of the authorities. Surely it should not be beyond the capacity of the very able persons in the Inland Revenue, who can be so astute in extracting taxes from us, to devise ways and means of ensuring that funds of this kind shall serve only certain definite ends. First, they should be used only for the purpose of compensating injured parties. Secondly, if the funds accumulate more money than is necessary for compensation those accumulated funds should become an investment factor and be used to assist the general finances of the country and so help to avoid inflation. I think the Chancellor would admit that the more money we can divert into national investments the better it will be. Funds of that kind cannot be treated as long-term investments, but if, as we all hope, they may not be needed for compensation purposes, I see no insuperable difficulty in the way of their being used to assist the general financial effort of the community. Thirdly, the Chancellor, in any steps he takes to supervise these funds, should ensure that ultimately they are not used for the purpose of evading tax. I submit that those three governing principles are perfectly sound and would meet the problem of the possible evasion of tax, and I earnestly appeal to the Chancellor


not to dismiss our suggestions but to give us an assurance that they shall have a further and a thorough examination.

6.5 p.m.

Sir Herbert Williams: A good deal of what I had intended to say has been kindly said on my behalf, I understand, by my hon. Friend the Member for Elland (Mr. Levy), whom I asked to speak because I knew that my attendance at a Select Committee would prevent my being here at the start. The discussion up to now has been carried on upon the assumption that insurance is always based on the principle of payment of premiums before the event. I have been asked to raise this matter by Mr. Simpson, the secretary of the Incorporated Electricity Supply Association, who is also secretary of the Joint Committee of Electricity Supply Associations, which brings in the companies as well. They have for some time been considering the difficult problem which would arise in the event of serious air-raid damage to a large power station. It is conceivable that the amount which would be required for the repair of that station might be a sum outside the capacity of the undertaking. The idea was that the whole electricity industry of the country should devise a system of mutual aid, which would be very much in the public interest, because the restoration of the service would be an urgent necessity. After much discussion I think the scheme has developed upon these lines; that there will be no premium payable in advance, but a liability to pay a levy to meet the interest and sinking fund on any capital sum which may have to be raised to meet the damage. Those levies would continue for years after the war, when Excess Profits Tax had gone—because we assume that after the war is over that tax will come to an end. The justification for the attitude of the Financial Secretary to the Treasury is that under this scheme the Government would, in fact, be paying the premiums, but that would only be the case during such time as the levy was being paid and the Excess Profits Tax was also in force, and that is a consideration which deserves attention.
The scheme proposed could not be carried out without legislation, and I do not think a Bill to promote a mutual insurance scheme for public utility concerns could include a proposal that taxation

should be remitted, and therefore I feel that the Finance Bill provides the right occasion for dealing with the matter. We shall have other Finance Bills, the next one, I presume, before Christmas, and by then I imagine the scheme to which I have referred will have reached its final stage. As what has been proposed by the electricity industry may be copied by other public utility concerns, I would ask the Chancellor of the Exchequer not to close his mind to certain problems. I think he is right to stop people from inventing an insurance fund in which they can "park" a lot of money on which they have not paid tax and share it out after the war, but if it is a legitimate scheme designed to meet what may be an urgent public need, designed far more in the public interest than in the interests of the insured, he should give the matter some further consideration.
Another problem was raised by the hon. Member for East Ham, South (Mr. Barnes). The evacuation of people from certain areas for military reasons has brought many electricity undertakings, both company and municipal, into a parlous condition. In many coast towns electricity undertakings will incur heavy losses. Though I am not familiar with any of the details of it, there is under consideration a proposal by which undertakings in the more prosperous areas, some of whom have been made more prosperous by what has occurred, should come to the aid of those which may be distressed. That proposal is only in the most tentative stage, but I think it would be unfortunate if it were to be destroyed because the Chancellor should say that any such expenses could not be regarded as expenses to be chargeable against revenue.

6.9 p.m.

Sir K. Wood: I have only one or two observations to offer on this subject, because, as the Committee knows, we have a lot of business to do. I dare say that my hon. Friend knows that I have given a good deal of personal consideration to the position of the co-operative societies in this matter, and that at the Treasury we have endeavoured to see whether we could help them in some way in connection with any scheme, and I need hardly say that we shall continue to do so. I shall also examine any other proposals which may be put forward by industry, but I must be frank and tell the Committee that I cannot assent to any pro


posals which would make any large change in the legislation which we have already embarked upon because, as is known, we are in agreement about that. Those connected with co-operative societies will know the difficulty there would be in keeping any scheme of that kind within the terms of the legislation which I hope soon to see upon the Statute Book. My concern is that what is done should not be at the expense of the State, and I think the Committee will agree that it is essential that the particular provision of the Bill which is before us should be on the Statute Book. As to the Amendment, I know that it was put down really for the purpose of raising the question and not with the idea of pressing it. It would be putting too much of a burden on the Treasury to decide, for example, what would be the proper premium to meet war risks. I dare say that my hon. Friends will be content with having put forward this Amendment and getting an opportunity to submit their case, and I need hardly say that anything I can do to assist the end they have in view I will gladly do as long as I can preserve the interests of the taxpayers.

6.12 p.m.

Mr. Woods: One of the major reasons for putting forward this Amendment was that such schemes as have been suggested in various quarters have had to be drawn up because of the failure of the Government to provide a comprehensive scheme to cover the whole business community. While the Financial Secretary held out some vague hopes—his words were "by and large"—that sufferers would get some indemnification, there is no guarantee that many of the businesses which are now suffering will survive until after the war. It will not be a question with them of being treated "by and large" but of their having been "given the go-by." It would be more helpful if the Chancellor would face up to the issue of providing a national scheme to meet the problems which we have been considering, because there is a very real risk to many businesses throughout the country. With the permission of the Committee I propose to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question, "That the Clause stand part of the Bill," put, and agreed to

CLAUSE 13.—(Special provisions as to mines, oil wells, etc.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

6.14 p.m.

Mr. Tinker: The Committee will remember that when this subject was before us earlier very strong exception was taken to the proposal from this side of the Committee, largely because there was uncertainty about what the Clause meant. I am still not sure what it does mean, and I am anxious to know what implications there may be in it. As I read the Clause it proposes in certain circumstances to allow coal mines a special preference in the matter of Excess Profits Tax. Paragraph (b) of Sub-section (1), says:
shall not in any case increase the said percentages by more than a further 4 per cent.
Does that mean that if a firm or company are already making 10 per cent, they may make an application for a further 4 per cent., or does it mean that where the dividend is less than 10 per cent, they can ask for an increase of 2 or 4 or 6 per cent, or whatever is necessary to bring it up to 10 per cent, but must not exceed 10 per cent.? To my mind Excess Profits Tax should apply equally all round, and if we are making an exception in this case, then we ought to know why. Why are these particular concerns to have special treatment? I want to know whether there are any means by which a workman employed in that industry will be able to get back, from the given percentages, some of the money that is being handed to the companies. Some explanation is required before my mind will be more easy about the reason for this proposal being put forward. I take this opportunity to ask the Solicitor-General to explain the matter. Complicated proposals like this are usually handed over to the Law Officers of the Crown. They give us legal phraseology, which often makes us so confused that we let the particular proposal go by without much criticism. Sometimes we do not understand what it means, but rather than appear doubtful we let it go.

6.16 p.m.

Mr. Ellis Smith: Is the right hon. Gentleman satisfied with the wording of this Clause? Is the Clause fair to


the rest of industry? Will not the administration of the Clause lead to a large amount of legal quibbling? I am very concerned about the export trade, because many centres of it have to contend with assets of a wasting nature. For example, when material is ordered and has to be stocked, it may deteriorate and contract. I understand that an allowance is made in the assessment of Income Tax for that deterioration and contraction, but I would like to know whether the administration of that allowance is fair, when the amount of the allowance that will be made if the Clause is accepted is considered in relation thereto.
The engineering industry has to take considerable risks. It seems important that its export section should be maintained, in order that we might keep our markets abroad. When large castings are being made, for turbines or electrical generators, for example, large risks have to be run, and often there are two or three scrappings. Does the right hon. Gentleman think it is fair for an allowance to be made to one section of industry when other sections are running risks such as I have just indicated? The same thing applies to wood, which has, in many instances, to be stocked for a considerable period. Deterioration may take place and result in very large expense to the industry. Although allowances are made in the assessment of Income Tax in regard to deterioration, I understand they are not fair, when compared with the allowances to be made under the Clause. I should like answers to the questions I have put, in order that people in various sections of industry might understand the reason for the Clause.

6.20 p.m.

Mr. Sloan: We had this matter before us previously, and a very important speech was made by one of our mining Members. Since then, much has been going on behind the scenes. It appears to me that the mining industry is now prepared to allow the matter to go forward. I protest very strongly against this innovation, and against any action to place mineowners in a different position from any other class of people in the country. From time immemorial, mineowners have been able to place their handkerchiefs to their eyes and to cry that their industry was always a losing one. They have lost money in

the mining industry since I was a boy. I cannot go back further. From my earliest recollections the mining industry has always been losing money, and coal-owners have always died, leaving fortunes. The industry is doing pretty well at the present time, from the mine-owners' point of view, but not so well from the miners' point of view. Any concession in this matter should be made to the workers in the industry.
I sat through the Debate the other night and did not speak. I was impressed very strongly with the speeches that we had from all parts of the House referring to the enormous wages being earned by the workers. I do not know what wages are earned in munitions works, but I fancy that the £9 or £10 a week which have been stated are very much exaggerated. I know one thing, and it is the wages that the miners earn. Within two minutes I could bring this Committee the latest ascertainment of the Scottish miners. It proves that the average wage of 90,000 Scottish miners was 12s. 5d. a day for May and 12s. 4d. for June, and that is at a time when prices are going up. Assuming that the miners are working a five-day week, which is a fair average, Scottish miners are to-day working for a wage of about £3 a week.
No case is put forward in the Finance Bill for the miners, but a case is put forward for the employers to get away with a great deal more of the swag. Read through the reports of the coal companies at the present time and see what they are earning. They are able to put back sufficient into the industry from those earnings to meet what are termed the wasting assets. Miners in every part of the coalfields of Great Britain have strongly resisted the attempt to have something inserted into their wage agreements in this connection. In Scotland, the coalowners have attempted to insert in mining agreements made since 1921 a clause referring to the replacement of capital. The suggestion has been resisted by the strength of the organisation. The miners have now refused to allow such a provision to be inserted in their agreements, but the Chancellor of the Exchequer is making this present to his friends in the coalfields, the coalowners. Evidently, the opposition that has been put up from these benches is to be very


limited indeed. [HON. MEMBERS: "No"] Well, they are not here. If any Clause in the Bill should be pressed to a Division, it is this Clause.
The proposal is nothing short of an imposition. How can the claim be made that there are wasting assets here, more than in any other industry? Pits in Scotland have been working for 100 years. It has taken, so far, 100 years to waste those assets. The Chancellor of the Exchequer now proposes that we should make provision for assets that last 100 years. I hope he will be here to see the last of them. Why are they called wasting assets? The coal is said to become less every year it is worked, but it is still there. We are now told that more coal is to be taken out and, therefore, that the assets will waste more quickly than in a normal period. For the last 20 years the pits have not been working more than half time. If they had been working full time, far more of the assets would have been wasted than will be the case, during the period of the war. The prospect now is that the assets are going to waste on the bings. The coal is to be brought out of the pit and stocked. We are told that there are at least 20,000,000 tons in stock now. The wasting assets for which we are to pay the coalowners is to be wasted on the bings.
The Chancellor of the Exchequer would be very wise to withdraw both of these proposals, which suggest to me unemployment for the miners at the termination of the war. Remember what took place at the end of the last war. In 1921 and 1926 the miners were smashed. They will be smashed more rapidly if the mine-owners get this extra 4 per cent, with which to build up their financial assets and if they stock the country with coal. They will be able to say to us, "Now we have you, if you go on strike. The industries of this country will not suffer, even if you do not work for the next six months." The proposal to hand over the 4 per cent, and to stock the country with coal are very serious dangers to the miners of this country. The Chancellor should ask himself whether it is not advisable to get in touch with the mineowners with a view to putting the industry in a better position than it is at the moment. We have been told that the more money you

give to the coalowners to build up their industry, the better it will be for the miners in times of depression and the more money you will put into their pockets. That has not been my experience during the whole of my life—and up to the present I have spent it all in the mining industry—and I hope that the Chancellor will now act upon what I have said.

6.31 p.m.

The Solicitor-General (Sir William Jowitt): The question has been asked whether hon. Gentlemen opposite were right in guessing that the explanation of this Clause would fall to my lot. It is a singularly complicated subject, and, as such, it is one with regard to which the Chancellor says to the Law Officer, "This is something to which you must attend." I was asked whether I was satisfied with the language of the Clause. When I find a Clause with regard to which there is obviously a good deal of misunderstanding, notwithstanding that the Clause has obviously been read with some care, I say quite frankly that I am not satisfied with the language of the Clause. I am not suggesting for one moment that I could do better, but it is obviously unsatisfactory that the matter is found to be so complicated that even after it has been carefully read there is left a doubt as to the meaning of it in the minds of hon. Members opposite. That there is a misapprehension is, I think, clear, and I want if possible to try, not to obscure its meaning, but to make quite plain what the Clause is to do.
We start at this point. We begin with the Excess Profits Tax. The Excess Profits Tax pre-supposes a standard. You tax that which is excess to that standard. The standard, as laid down in the 1939 Act, is a standard of a certain year or an average year. That is the standard period. In the great majority of cases, of course, you are dealing with excess profits by comparing the earnings afterwards with the earnings in the standard year, and the difference between the two is the excess. That is not affected at all by this Clause. There do arise certain cases, however, in which you cannot avail yourself of the pre-war standard. It may be that the business was started too late and that it has no pre-war existence, or it may be that although the business was started in the pre-war days yet it has been altered by the addition of a new


amount of capital, so that there is no prewar standard for what I may call the new business. That is one case in which you cannot avail yourself of the pre-war standard. In such a case the Act of 1939 provides that in the case of these new businesses, or businesses where new money has been brought in, one should have regard to the statutory percentage, and the Act provides that such businesses may get 8 per cent, or 10 per cent., as the case may be, upon the amount of capital which they have in the business. That applies to all businesses—not mines or things of that sort but businesses.

Mr. Tinker: Why in a case like that is there the difference of 8 per cent, or 10 per cent.?

The Solicitor-General: It depends, in the Act of 1939, as to whether the business is a director-controlled business or not. If it is a comparatively small company which is really the alter ego of the director, then they allow him 10 per cent., but in relation to the trade or business not so carried on, 8 per cent. That was settled in 1939. The other class of case in which it would not be safe to base yourself upon a pre-war standard is where, although a company has had a pre-war existence, it has had very bad luck during the pre-war years and has either made no profit or has made such a very low profit that it would be obviously unfair to base your standard upon a pre-war period. Therefore, in that case also, the legislature has provided by the existing law for an alteration of what otherwise would be a nil standard or a very small one. By the first Finance Act of 1940 the Commissioners, if they are satisfied of those facts, are allowed to fix what the standard shall be, provided that the standard is not to be more than 6 per cent, or 8 per cent.; again, there arises the same question whether it is director-controlled or not. Those are the cases in which you cannot rely simply on a prewar standard and you must have regard to what I may call a statutory percentage.
Now let us take the illustration which I gave before of, say, a laundry company and a copper mine, because, be it observed, this Bill applies to all English companies. It does not necessarily follow, however, that the business is in England. An illustration is provided by a copper

mine because copper is so badly needed for the war that, of course, we are asking those copper mines to produce above their normal production at the present time, and they are selling the copper at controlled prices. I do not wish to deal with coal mines—

Mr. E. Smith: That means a copper mine in another part of the world?

The Solicitor-General: Certainly. Unfortunately, there are none in this country, as the hon. Member knows. I am referring to a copper mine where the company is situate in England and is subject to English Income Tax. Of course, it may own a copper mine in Rhodesia.

Mr. Sloan: May I ask why the Solicitor-General does not deal with the coal mines?

The Solicitor-General: I shall deal with coal in a moment, but I wish to deal with it in my own way.

Mr. David Adams: The Solicitor-General said it applied to all companies. Is that so?

The Solicitor-General: It applies to all British companies, whether the business is in Rhodesia, or in Honolulu, or in any other place. It applies to businesses dealing in minerals or oil, and copper is a mineral. Now, is it fair to treat the laundry company and the copper mining company on exactly the same basis from the point of view of fixing what the statutory percentage shall be? In one sense the assets of every company are wasting assets.

Mr. E. Smith: It is a matter of degree.

The Solicitor-General: It is a matter of degree entirely. Some companies waste more than others. I can conceive of a copper company where you can more or less measure what the reserves are. I can conceive of it being said, "You are asking me at the present time to waste out my copper at four or five times the normal extent by reason of the war effort, and it is grossly unfair to me to give me the same statutory percentage as you would give, for instance, to a laundry company. It is true that their machinery wastes too, but relatively my waste is much greater than theirs." Consequently, the copper company would be entitled to


go to the Commissioners—and this is rather important—and say, "Having regard to the fact that our assets are wasting assets in the relative sense of the word, we ought to be treated on a favourable and a differential basis. Give us some allowance."The Commissioners may give them up to an extra 4 per cent. It does not necessarily follow that they get 4 per cent. It is not an automatic, addition of 4 per cent, to the 6, 8 or 10 per cent., as the case may be. It is the ceiling beyond which the Commissioners may not go. Of course, the company may not make good their case at all. If hon. Members will look at Clause 13 (1, a) they will see a proviso as to what the Board can do. They
shall increase the said percentages only so far as they think necessary to allow for the consideration that, by reason of the wasting nature of the natural source in question, the benefit of capital expenditure incurred by the persons carrying on such trades or businesses may be exhausted at a greater rate than in the case of other classes of trades or businesses.
I shall not attempt to pre-judge what the Commissioners may say, but both the hon. Members for Stoke (Mr. E. Smith) and for South Ayrshire (Mr. Sloan) have made observations which would be quite relevant for the Commissioners to consider. I can well imagine somebody saying to the Commissioners, as the hon. Member for South Ayrshire said, "You really should not have any regard to the theory of coal mines having wasting assets. They estimate the coal periodically and, so far from wasting it, each time there is more." The argument of the hon. Member for Stoke, with his engineering experience, concerning those workshops where castings have to be scrapped and the woodwork warps, or whatever it may be, could also be used. You may say that those industries have a greater wastage of assets than the coal mines. It is a matter for the Commissioners to consider.
What is being done in this Clause is to give these people a right to go to the Commissioners to have their cases heard, and to say, "My industry is wasting its assets at a faster rate than other businesses; please let me have something in addition to the statutory percentage which you give to everybody else—Tom, Dick or Harry." They may or may not make a case. It is for the Commissioners to decide. Whatever the Com

missioners decide, in the most extreme case such as my case of the copper company, the Commissioners may not give more than an additional 4 per cent. I hope I have made it plain what, at any rate, this Clause is trying to do. I deliberately took the case of the copper company because I think that is a very extreme case in which to make out a case for wasting assets. I merely gave that as an illustration. I do not want to deal with this question as if it were an issue between the miners and mineowners.

The hon. Member for Leigh (Mr. Tinker): asked me whether there was any way by which, if the mineowners got something special allowed to them—it may be up to 4 per cent.—they could ensure that that money should be obtained for the miners. Of course, my right hon. Friend the Chancellor—the hard taskmaster—has to get his money, not for miners or mineowners but for the benefit of the nation as a whole, and the miners will look to their trade unions— if I may say so I am a good trade unionist and proud to be one—to see that they get a proper deal. If they do not get it that way, I am not sure how else they will. I confess, quite openly, that I think they are more likely to get satisfaction from an employer who has some money to spare than from one who has been cut right down to the bone.
But that is not my principal reason for supporting the Clause. I desire to support it on the simple ground that if a man can make out that his business is differentiated from those of other people, then, in this rare case where you are dealing with a statutory percentage, he ought to be able to go to the Commissioners and have his case heard, and have a chance of making good that case. If he does make it good, he ought to be treated differently from the other men. When this matter came up before, it took the miners' representatives by surprise, and the Chancellor authorised me to say that it would not be proceeded with that day. Since then, it has been discussed with both sides of the industry. We have dealt with the mineowners' representatives and with the Mineworkers' Federation. We have obtained an assurance that this concession will never be allowed to enter into the ascertainment of wages, and, in those circumstances, we have, after full consideration, obtained a letter from the Mineworkers' Federation saying


that they are fully satisfied with what we have done, and that they accordingly withdraw any opposition that they have had.

Lieut.-Colonel Sir William Allen: The right hon. and learned Gentleman referred frequently to "the Commissioners." The Bill mentions a Board of Referees. Perhaps he would explain how the Board of Referees comes in to this, and what is the connection between the Commissioners and the Board.

Mr. Glenvil Hall: How, by any stretch of imagination, can such a matter as this be expected to enter into questions of wages? How could the mineowners take it into account in deciding the wages?

The Solicitor-General: With regard to the last question, I never thought that it could enter into such questions; but some apprehension was expressed, and we were told that an attempt had been made in the past. It was for that reason that I referred to it. I am afraid that I referred to the Commissioners in error. I should have said that, under Clause 13, the application is made to the Board of Referees, not to the Commisioners.

6.49 p.m.

Mr. Douglas: The Solicitor-General has given us a very valuable explanation, but the explanation does not cover all the points involved in this question. The ascertainment of profits for the purposes of the Excess Profits Tax is in normal cases, I understand, made upon Income Tax lines. The provision here applies only in those cases in which comparison is made between the actual profits and the standard. In a normal case, there is no provision, I understand, for the wasting mineral asset. I know that in many mining companies, if not in all, the dividend declared is on the gross profit, without any provision for the replacement of the wasting mineral asset. That is true of many mines such as those to which the Solicitor-General referred. Mines conducting business in South Africa normally pay their dividends on such a basis. They do not accumulate any reserve for replacing wasting mineral assets. That being so, the provision in this Clause, instead of rectifying an anomaly, introduces a new anomaly, and places certain companies, which have been recently started or which

happen to have had in the comparison period extremely low profits, in a privileged position.
In addition, the principle of making provision for replacing the mineral asset, or its value, is entirely wrong. The Clause is drafted in an extremely ambiguous manner. Proviso (a) refers to capital expenditure incurred by persons carrying on trades or businesses. It is not clear whether it means capital expenditure in acquiring the mineral, or capital expenditure in working the mineral. If it is capital expenditure on the plant and machinery required to work the mineral, I can appreciate the argument in favour of making some special provision for extraordinary depreciation owing to the shortness of the life of the mineral asset; but if it is intended to make provision for replacing the mineral asset itself, you are not making provisions for the normal thing provided in the accounts of commercial undertakings, which are all directed to replacing tangible capital—machinery and things of that kind. The asset which it is proposed to replace is something which never cost anything to produce, and there is no economic necessity for any fund to be built up in order to replace it.

6.53 p.m.

Mr. David Adams: The exception that I take to this Clause is based on its partiality. The principle on which this concession is made seems to be entirely unsound. Surely, coalowners and others take proper cognisance of their financial liabilities at the moment, and of their future liabilities. If the business is soundly run, provision is made accordingly. Who imagines that the copper mine does not make adequate provision for the depreciation mentioned by the Solicitor-General? His complaint is that their profits for disposal to shareholders are limited to anything from 6 to 10 per cent. Surely, in these times that is a reasonable profit. I shall be greatly surprised if the House does not insist before long on a limitation of dividends. It is possible that the concerns which will come later on for this relief may have been earning very large dividends. I know of certain concerns which are gladly paying 100 per cent. Excess Profits Tax, but are paying 25 per cent, upon their capital. Such concerns may, under this Clause, come to the Commissioners at some later date, and say, "Our


assets are substantial and rapidly wasting, and, although it is true that we have paid away our capital in dividends several times over, we are entitled, under this Clause, to this concession as a public charge."

The Solicitor-General: The hon. Member is under a misapprehension. This Clause will not apply at all to a company which had a good standard year. I tried to make that clear.

Mr. Adams: Suppose a company had a standard year of not more than 10 per cent., would it not apply then?

The Solicitor-General: No.

Mr. Adams: Then I cannot understand it at all.

The Solicitor-General: The Clause provides only for those companies in respect of which there must be resort to some other method than the standard year, either because they are new companies or because their pre-war record was so unsatisfactory that they have to be assessed on capital, and not on revenue.

Mr. Adams: That is precisely what I am arguing. A company having a standard year of below 10 per cent, can, in due course, come to the Commissioners and ask for relief on account of wasting assets. I contend that it is unjust to find this additional money for a specialised set of businesses, whose alleged assets may rapidly decline, as against other businesses. The assets may not decline more rapidly than those of shipping, manufacturing, railways or the export trades. This is in decided contrast to the treatment meted out to the industrial workers. We hear it bruited about that they must content themselves with the wages they received in pre-war days, and that no one must be richer because of the war. Here you are going to give to great industrial concerns treatment of a preferential character, so that they may receive, without any justification that I can find, very large sums at the public charge.

6.59 p.m.

Mr. Gallacher: I want to make it very plain that I consider such a Clause as this most shameful. It is often said that some of us on this side of the House preach the class war. We do not

know the first thing about the class war in comparison with the other side of the House. There are Members on that side who ostensibly represent their constituencies, but who are the highly-paid legal advisers to big industry. Highly-paid legal advisers to the mineowners are behind this, and it is a shameful thing. Whose assets are we talking about? Are they the mineowners' assets? The coal belongs to the people, or should belong to the people. The Solicitor-General is directing his attention to very clever and cunning special pleading. It is a pity that we do not have Members on this side of the Committee ready at all times to defend their class. Wasting assets. I ask the Solicitor-General to go around the industries and to see how the assets of the workers in the steelworks and shipyards are being wasted at this particular time. The only asset that they have is the strength of their muscles, their nervous energy and their power to labour. Is not that being wasted? Some of these big fat fellows in the City of London have been asked to make a sacrifice because their assets are being used to bring up from the mines four times more copper than ever before. They must receive consideration. It is shameful that this should be allowed to go on. How can any man in this House who claims to represent the working classes tolerate any talk of wasting assets, when he sees all around him hundreds of thousands of men and women working all hours, and their strength and energy being torn out of them, and there is never a word of consideration for them? This Clause should be opposed by every Member of this Committee.

7.2 p.m.

Mr. MacLaren: I came in in time to hear the argument of the Solicitor-General, and it was very entertaining. I know him better than to believe that he advanced it in all seriousness. Anyone who mixes up a laundry with a copper mine is making a first-class blunder. Here is a Clause in which language is used which should be challenged in the first instance. The thing that is vitiating the whole discussion is this nonsense called "wasting assets." I do not know who devised these words, but in recent months it has been interesting to notice that Government Departments have been inventing a nomenclature of their own. Perhaps there was a genius behind this


Clause. Instead of calling this land, he calls it a wasting asset which someone is exploiting or using.
When a mining company or any other form of company exploit a natural opportunity, surely they understand, if they are wise business men, how much they are likely to make out of the exploitation of some natural element, whether it be copper, coal or anything else. They know how much capital expenditure will be required, in the first instance, to exploit to the full the natural opportunity at their disposal. They are not objects of pity because they use their capital to exploit some part of the earth. In this case we are told that it was a copper mine, or a coal mine, and there is a fixed term in time during which their capital can be in operation. That is what it amounts to. A copper mine or a coal mine, as the case may be, it is adduced from the argument to-day, is not infinite in time; it cannot be subject to natural exploitation for all eternity. Therefore, in terms of time, those who are going to exploit the natural opportunities know that there is a fixed time to it. The capital expenditure in the first instance, if it is undertaken by wise business men, will be such that it will be compensated in use by the amount of the natural opportunity they are to exploit.
Here we come across this fanciful invention of wasting assets. The only thing that is wasting here in the long run is machinery. If you have a good business system, you will be able to make enough profit to be able to replace your wasting machinery. But it is a well-known economic fact that you do not really waste machinery, because the cost of the machinery is included in the price of the commodity that you sell. You retrieve yourself in the price. I hope that I am not going too technically into economics on this point. Men who do not understand economics usually use the words "wasting assets." What object is there in submitting to this Committee, and what point can be submitted even to the right hon. and learned Gentleman opposite for his consideration, that the persons who are using their capital to exploit a natural opportunity—subject to exploitation by a given time, of which they know in the first instance—should have special treatment as against any other user of capital in the ordinary processes of the development of business? If you intro

duce the words "wasting assets," you bring into the discussion sentimentality, and that gives an immediate escape. Therefore, special pleading is introduced on behalf of people who are using the mines, whether they be copper mines or coal mines. Is there any compensation to be advanced in proportion to the reduction of the natural opportunity whether it is copper or coal? Is it the argument that they are to have special consideration here because the longer they exploit this natural opportunity the less there is in the store of nature for them to exploit, and, therefore, pro rata, they have to be given a special remission or receive special consideration?
The copper mine, the coal mine and the oil specially mentioned in the Clause —all these things are land. They come into the economic category of land, whether it is oil, coal or anything else. Therefore, when capital is used to exploit the land in order to get at the natural opportunites, those opportunities are not being wasted if they are being taken out of their natural situation and so shaped and formed as to be used to gratify some human desire. They are really being put at the service of mankind. The capital undertakings which undertake these duties see to it that they are adequately compensated by the community for so expending their capital, and that they will all have a good profit by so doing. I cannot for the life of me see why they should be specially treated in comparison with other forms of capital exploitation. And so I say to the Solicitor-General, "Do treat some of us with a little consideration, and do not mix up laundries with copper mines." They are quite different. If I were asked to explain it, I would say this: Copper and coal play a part in one of the things we are discussing here. They were not created by man-made efforts, whereas laundries in all their operations and make-up are surely created, from A to Z, by purely capital production.

The Solicitor-General: I gave illustrations as far apart as possible.

Mr. MacLaren: I see the analogy, but I think my right hon. and learned Friend will admit that sometimes you can make comparisons so far apart that you get no middle course. You had to fly to the extreme in bringing in a copper mine to


support the fallacious contention embodied in the Clause. If there is a difference between capital expenditure on the development of some mine, or part of some land, that is different from capital expenditure on a laundry. If there is a difference, why try to make a comparison between one and the other to support your case? Keep this form of capital development quite apart from any other form of capital development and argue your case on the capital expenditure you are discussing, which is that owners of capital who are exploiting a golden opportunity have under this Clause to receive special treatment against those who are using capital in other directions. The plea put forward to-day for special consideration is on the ground that they are using a wasting asset. The words "wasting asset" have vitiated the whole atmosphere.

Mr. Tinker: The hon. Member for Burslem (Mr. MacLaren) was not present when I asked the Solicitor-General for an explanation of this Clause. I want to say to the right hon. and learned Gentleman that, to his credit, he has explained what I had in mind. I certainly do not agree with it all, but the explanation was good, and I accept it.

7.13 p.m.

Mr. Craven-Ellis: I spoke on this question of wasting assets a few weeks ago, and the objection I took then I take now. There is no such thing as a wasting asset in coal mining, stone mining or any similar operation. I put it forward that the words "diminishing assets," not "wasting assets," should have been used. A colliery or mineowner who has to conduct his business in a proper manner and make provision at so much per ton for the mineral he is mining is proceeding to exploit that mine, and if a company is not doing that, then I say there is no justification for making special provision for E.P.T. If this matter goes to a Division, I shall not feel disposed to support the Government, because I think it is establishing a very vicious circle and giving a concession to a section of the industry to which they are not entitled. I heard nothing from the Front Bench which justifiably supports this special allowance.

Question, "That the Clause stand part of the Bill," put, and agreed to.

Clauses 14 to 17 ordered to stand part of the Bill.

CLAUSE 18.—(Charge and commencement of Purchase Tax.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Amnion: Do you intend, Colonel Clifton Brown, to call the Amendment to this Clause which stands on the Order Paper in my name?

The Deputy-Chairman (Colonel Clifton Brown): That Amendment is covered by the proposed new Clause.

7.16 p.m.

Mr. Pet hick-Lawrence: As this is the operative Clause of the Purchase Tax, I think a few words should be said about it at this stage of the proceedings. Those who are associated with me in this matter have, from the beginning, viewed this new proposal with considerable misgiving, and I want to say that that misgiving is by no means wholly removed at the present time. We hope the Chancellor of the Exchequer will watch the working of this tax, because there are a great many people who believe it will not work satisfactorily. If he finds that it is not so successful as he and his advisers at present think, we hope he will not be above repealing the tax and substituting for it such other forms of obtaining national revenue as are not only more workable but more just in every way. At the same time, however, we do not wish in any way to thwart the national effort, and we have no desire to see inflation coming about in this country. In view of that, we have said before, and I repeat it now, that we do not intend to oppose the passage of the Purchase Tax.
Apart from the principle of the Purchase Tax, there has been the method of imposing it. As it was originally proposed, only the principle of the tax would have come before the House in the first instance. The Treasury would have had to have implemented that principle in all its details, and the House would have been asked for a single Resolution, either approving or disapproving of the Schedule which the Treasury would have had the right to frame. That, in my opinion, and most of those with me, was a thoroughly undemocratic and unsuitable method of imposing new taxation, and I


am very glad to see that the Chancellor has changed all that. I thank him, because the present method is greatly superior to that which was proposed before. Of course, even in its present form, the method of imposing this tax is somewhat new. What we are being asked to do is to impose several thousand new taxes of varying effect upon all sorts and qualities of commodities. It is not surprising, therefore, that in such circumstances there should be a large number of Amendments to omit, amend and cut down the various parts of the Chancellor's Schedule. I notice that some of them strike at the root of the tax itself. It would not be in consonance with our decision if we supported those Amendments.
There are others which propose the exclusion of a considerable class, and notable amongst Amendments of that kind is a proposal to exclude the book tax and the newspaper tax. I have no doubt that that will give rise to considerable debate, and I am sure the Chancellor of the Exchequer will give due weight to the very substantial case which will, no doubt, be made out against that part of the Schedule. The final set of Amendments, which are among those to which my hon. Friends have put their names, are of a rather different character. They are not aimed at the main substance of the Schedule, and they are not designed to destroy any large part of the revenue which the Chancellor expects, but they are designed to take out from taxation certain small articles which, in our opinion, press with particular heaviness on certain persons. I believe it is fully in consonance with our attitude towards the tax as a whole that the Chancellor should give his careful attention to these Amendments. Of course, we recognise that, in asking for that, the special commodities which we hope the Chancellor will exempt—or that he will lower the column in which they are placed —shall be particularised in some way which will enable him to cut them out from the Bill without striking out a large class of goods which would injure the yield of the tax. I hope very much that the Chancellor will be able to tell us, before we reach the Schedule itself, that he will give sympathetic attention and consideration to Amendments of that kind, and that we can be assured that, when we move that class of Amendments,

he will be able to give them sympathetic consideration with a view, if possible, to making some concession.

7.24 p.m.

Sir Percy Harris: I am very glad that the right hon. Gentleman has given the Chancellor of the Exchequer a chance of giving us some lead on this Clause. When I spoke on the Budget Resolution, and had an opportunity to congratulate him on his first speech in his very responsible position, I was one of those who recognised the very great difficulties of his problem. This particular child certainly is not his. He is the foster parent. He had it handed over to him by his predecessor, and already he has made very considerable changes in its appearance. It is a much more attractive child than when it first saw the light of day. I understand that one of the reasons of his appointment is his sweet reasonableness. Everyone has recognised that no Minister at any time in the last few years has been more amenable to persuasion or ready to listen to arguments, and no one can regard him as a bitter, brutal, hard, unsympathetic Chancellor who, having once made up his mind, will not give way. We have to recognise already that he has made some very valuable concessions, which will be appreciated in every home, and, of course, relieve the pressure of his tax on those least able to bear it.
Like every other Member, I have been swamped with letters from every industry and trade in the country. It is suggested that taxicabs should be exempt, and medicines, and a great number of other articles. If all these suggestions were listened to, there would be very little left of the tax, and we all recognise that, if it is to justify its existence and to bring in revenue, which is its main purpose, the Committee would have to join with him in resisting some of these Amendments. Every section of the House has accepted the tax in principle. It is very difficult to devise taxes which, on the one hand, bring in revenue and, on the other, do not press with exceptional hardship on some people. If the right hon. Gentleman wants this tax to go through substantially in its present form, he would be wise to conciliate those who are most clamorous at present. To tax books is so much against the best traditions of the country—a tax on the printed


word—that inevitably it is likely to arouse an amount of opposition which will make the passage of the Clause very difficult. The one thing that we want to avoid is Divisions. We are one happy family, with no party differences. Therefore we have all to make our contribution. The right hon. Gentleman will save a great deal of time, and enable us to go away much earlier to our holidays, if he will here and now say he is prepared to make a comparatively small concession in a time of heavy taxation. When we are thinking in milliards, a tax of this character seems rather small, mean and petty. I do not blame him. He did not realise the storm that he would be raising by omitting to omit books. I do not suppose it ever occurred to him that Bibles would come under this category. It is the last thought that would enter his mind.

The Temporary Chairman (Mr. Charles Williams): I think we must keep off details, or we shall be limiting Amendments.

Sir P. Harris: I was only going to remind the right hon. Gentleman that the distinguished name that he carries— Kingsley—is historically associated with literature. We feel that we can safely leave the subject in his hands. If he will get up now and make this gesture to the Committee, he will prevent a great number of Members making carefully prepared speeches, and he will expedite the passage of his Bill.

7.30 p.m.

Sir K. Wood: I am very much indebted to my right hon. Friends for the opportunity they have given me of saying a few words about the position as we find it on approaching the Purchase Tax. I recognise that there has been a good deal of give and take on both sides in our approach to this tax, and I hope that hon. Members in all parts of the Committee will recognise that I have done my utmost in trying to meet them, while, of course, retaining the tax in its modified form and not prejudicing it in relation to the amount of revenue which I must obtain. I appreciated particularly the criticisms that were made of the tax from the point of view of the poorer people, and it was for that reason that, when my right hon. Friend first

approached me and made the suggestion, I said at once that I would be prepared to exempt altogether the clothes and boots and shoes of children, because I felt that otherwise the households having the largest number of children would feel the pinch most. I have also tried to meet hon. Members on the constitutional aspect of the matter. If there is any question of making an alteration in the rate of the Purchase Tax—not that I am contemplating it—it will have to come forward in the Finance Bill in the same way as any other proposal, and not be dealt with simply by Treasury Order. Another important alteration which I made, again following suggestions that were made to me, was to abandon the single tax and to make a sharp differentiation in the two rates of taxation. I hope that this also has gone some way towards making the proposal more acceptable to hon. Members.
Having done these things, I know that the Committee will do its best to support me—as I was glad to hear both right hon. Gentlemen say—in endeavouring to get the necessary revenue, which it is so vital to obtain. I dare say that hon. Members have noticed that, at any rate in some quarters, I have been blamed for not introducing taxation proposals of a much more severe character. I hope that those hon. Members who have joined in blaming me in that way will come to my assistance by seeing that nothing is done to impede me in the particular effort in which I am engaged at this moment. It has been one of my recent experiences that, although a good many newspapers and writers say I should tax the nation much more severely at this time, when we come to discuss specific proposals all of them have their own ideas, and the last thing they want to do is to tax the particular thing which happens to be a favourite of theirs. For instance, after looking at the Amendments on the Paper, I must say that if I do not have the support of all parts of the Committee, practically the whole of the yield of the Purchase Tax will go.
If, for instance, I accepted an Amendment to exempt clothing, I should be exempting a taxable field of over £315,000,000. If I accepted an Amendment to exempt medicines, it would mean the loss of a taxable field of £20,000,000. Everybody has his own idea. Some people want to exempt medicines, and


others want to exempt clothes; and so the process goes on. If I exempted tissues and fabrics and domestic textiles, it would represent a taxable field of more than £50,000,000. If I exempted domestic and office furniture, I should lose the revenue on a taxable field of £25,000,000. If I accepted another proposal on the Paper and left out everything in the second column of the Schedule, I should lose a taxable field of more than £350,000,000 The Committee will not expect me to accept Amendments of that kind, for obviously if I did so the tax would have gone; and therefore, I shall look to hon. Members, however they may feel about the tax in respect of specific articles, to support me generally in the matter.
There is another matter to which I want to refer in order to give to hon. Members who will be moving Amendments some indication of how I am thinking about the matter. The suggestion has been made that taxable goods bought by certain bodies, such as local authorities, should be free of tax. The principle of my proposal is that taxable goods should be taxed always, unless they are bought by a manufacturer for manufacturing purposes or by a wholesale merchant for resale. If we once accepted the principle of having certain privileged buyers— whoever they might be—of taxable goods, I ask the Committee where we should draw the line. For example, if I accepted the proposal that local authorities should be privileged buyers, I should have to accept it in the case of their hospitals— and then I should be asked, why not for the voluntary hospitals? And if I accepted it for them, why not for other institutions supported by voluntary contributions? If I accepted it in respect of the schools of local education authorities, I should, in equity, have to accept it for tin public schools, and exempt articles purchased for their use. Once I was on that slippery slope, I should have to exempt goods bought by private preparatory schools, and then by all other educational establishments. If I were prepared to do that for that large body of people, then—since charity begins at home, I suppose—I should have to exempt all similar goods purchased by parents for the education of their children at home. Hon. Members will see the impossible position I should get into if, in

connection with a tax of this sort, I set up a sort of privileged class of buyers.
There is only one other observation I want to make. Apart from Amendments relating to the main groups in the taxable field to which I have referred, there is another set of Amendments on the Order Paper that refer to various articles which hon. Members think should be added, not as a class of goods but as particular goods, in one column or the other. I hope that in some of the cases of that kind I shall be able to meet hon. Members, but I say frankly that I must retain the revenue which I want to raise by this Purchase Tax. With regard to newspapers and books, the pet things of my right hon. Friend opposite, which he does not want to have taxed, I will give careful attention to what may be said in the course of the Debate; but here, again, I hope hon. Members will realise that these things represent a substantial taxable field, and that the question of revenue must be considered. Having given those general indications, I hope the Committee will see that I must, in the position in which we find ourselves in regard to this tax, retain the main bulk of revenue, but I am prepared to give careful consideration to any Amendment which may be moved.

Mr. R. C. Morrison: When the right hon. Gentleman made his Budget statement, he estimated that the revenue from this tax would amount to £100,000,000 or £110,000,000 in a full year. Will he tell us whether the modifications that have been made in the tax will affect that figure?

Sir K. Wood: No; I made that estimate after I had made allowance for the changes which have been made. It is an estimate for the proposals in the Bill as they now stand.

Mr. Levy: Has the Chancellor considered the anomaly which exists with regard to tissues? My right hon. Friend made a pledge that juvenile garments should be exempted, but has he considered the anomaly which arises in regard to thrifty housewives?

Sir K. Wood: Yes, Sir. I hope to satisfy my hon. Friend, and I shall look to him for his support in this and other matters.

7.41 P.m.

Mr. Liddall: I am opposed to Clause 18 standing part because I respectfully suggest that a better alternative is offered in a new Clause standing in my name on page 114, but I understand that it is not to be called. It proposes to put a tax on retail purchases instead of on wholesale purchases. If the Chancellor of the Exchequer would be willing to have a Stamp Duty of 25 per cent., it would eliminate many difficulties. For instance, a farthing stamp could be fixed in respect of a penny sale at fixed-price general stores. In this way he would ensure the collection of vast sums of money at no cost whatsoever.

The Temporary Chairman: The hon. Member must not discuss anything to do with the proposal, which comes later. He can only discuss the Clause now before the Committée.

Mr. Liddall: I am explaining why it is I am in opposition to this Clause, and I suggest that the better alternative is contained in the new Clause which stands in my name on the Paper.

The Temporary Chairman: That is exactly something to which the hon. Member cannot refer.

Mr. Liddall: I must accept your Ruling, but may I say that since this new Clause has not been accepted I could give countless instances where, if this Clause is agreed to, the Chancellor will be faced with difficulties which he will be unable to overcome? No doubt he has foreseen that by the new Clause which he has seen on the Paper he could better overcome those difficulties. I will not press the matter any further. I hope I have shown that, although the new Clause cannot be called, I wanted it called, and I wanted to see this tax placed on retail goods instead of on wholesale goods.

7.43 p.m.

Mr. Barnes: It was not my intention to intervene in the Debate on Clause 18, but I do so in view of a reply given by the Chancellor of the Exchequer to the comments of my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) and the right hon. Gentleman the Member for South-West Bethnal Green (Sir P. Harris). It appears to me that the Chancellor, in replying to these appeals, has given a wrong construction

of the concession he has made, and that he has prejudged the Amendments which will have to be considered later. I invite the Committee at this stage, bearing in mind the comments of the Chancellor of the Exchequer, to review the main facts of this Purchase Tax as proposed under Clause 18. The Chancellor of the Exchequer, in reply to the hon. Member for North Tottenham (Mr. R. C. Morrison), re-emphasised the sum of £110,000,000 which he hopes to collect from this tax after the concession has been made in regard to children's clothing and hoots. We have not in any way underestimated the value of that concession. The change in constitutional practice is a valuable one. But the more I examine column 1 and column 2, the more I am convinced that the differentiation in the tax is no concession in fact, and that it is more likely to delude this Committee and the public generally as to what this tax means.
I was very interested to find that the Chancellor has confirmed an examination I have been carrying on which discloses results which I think would be unexpected to this Committee. He mentioned that if he eliminates clothing, he takes out of the £600,000,000 field of taxation a sum of £315,000,000. That at once indicates what an illusion the first column represents. After consulting taxation and trade experts, we have arrived at a deduction which, if it was not so remarkable, I would hesitate to give to the Committee. It has been confirmed by the Chancellor himself with regard to the figure covering garments. The taxable field in the Chancellor's words covering wholesale goods is £600,000,000, and he aims at collecting from that £110,000,000 of revenue. The first thing that emerges is that this is a tax of 3s. 8d. in the £ on wholesale prices. I ask the Committee whether, if they were faced with that clear issue of imposing tax in the ordinary way at the rate of 3s. 8d. in the £ on wholesale prices, they would accept it? I suggest that such a proposal would never go through the House of Commons. I suggest that if it had been levied in the ordinary way, the proposition would not have stood 24 hours' discussion. It automatically advances wholesale prices by 18⅓ per cent., but even that does not disclose the whole of the situation.
The average person who looks at column 1 and notices the vast number of items mentioned would imagine that


the bulk of revenue was to be raised on what the Chancellor classifies as luxury commodities. In column 2 there are only four or five groups of commodities mentioned, and one would naturally assume that the Chancellor was letting off household and domestic necessities comparatively lightly with 12 per cent. But that is not the case. As far as I can gather from examination, if you take every £9 spent within the £600,000,000 subject to Purchase Tax, either at one-third or one-sixth, £8 of that £9 expenditure will fall within the second column and will pay the tax of 3s. 8d. in the £. That means that of every £9, £1 6s. 8d. will be collected in the second column on the basis of the one-sixth tax. Only 6s. 8d. will be collected in the first column.
When one analyses the first column one finds that the Chancellor has put many commodities and articles into it which he will subject to a tax of 33⅓ per cent, but which are not luxuries. Whereas in the third column young children's goods are exempted, we find in the first column items like children's cots, bedding, pillows, pillow cases, sheets, blankets, quilts, bath towels, flannels, toilet soap, powder, pin cushions, vaseline, cream, hair brushes, tape and safety pins; so that every item affecting the baby's toilet falls into the first column to be taxed at 33⅓ per cent. When one analyses these things in detail, one sees that the Chancellor is really putting over a bit of a fraud. I do not feel that I can allow his comments on Clause 18 to pass without pointing these things out. It would have been rather difficult for me to get these figures in on Amendments, but fortunately the Chancellor, by his reply on Clause 18, enabled me to put the other side of the picture to that which he tried to present to the Committee.

7.52 p.m.

Sir Henry Morris-Jones: We all realise the difficulties of the Chancellor in these days, and the speech of my right hon. Friend has confirmed what we know of his enormous task. We are anxious to support the Government in the proposals they make for taxation in order to carry on the functions of the State. Could I, however, appeal once more to the Chancellor to give us a lead on this Clause and tell us what he proposes to do with regard to the Schedules? There are all sorts of Amendments on the Paper for

deleting practically every item in them. I take it that the Chairman will not rule out discussion on any item. That will mean lengthy and protracted Debates, and a large number of Members will be placed in a difficulty with regard to special claims that they have made, some of which are not worth considering, but others are serious. The Chancellor mentioned, for instance, the question of medicines. He has omitted food from the Schedules on the ground that it is a necessity, but surely medicine is a necessity of as much importance as food. I can see great difficulties with regard to that item in the Schedule. The Chancellor and the Treasury know now what items they will agree to exclude, and he has given an indication that there are some aspects of the question which he cannot consider because it would limit his field of revenue. Would my right hon. Friend give a general indication now of what he proposes to do with the Schedules in order to avoid a large amount of discussion and probably Divisions in the Lobby, and especially to state whether he is prepared to make concessions on the medicines of the people and on books and periodicals?

7.5 p.m.

Mr. Woods: The Chancellor in his speech seemed to be appealing for the pity of the Committee. He did not seem to be very enamoured of his job in putting this Clause across the Committee and the country. He must realise that when the effects of it begin to operate and men and women go into shops imagining that their necessaries of life are not included in this tax, and feeling how kind the Chancellor is, and then discover that prices have gone up and they have only a certain amount of money in their pockets, there will be a storm, and the right hon. Gentleman will be very unpopular, and will deserve to be. He has to find the taxation, but we contend that it could be found in a straightforward, honest, decent and equitable manner by taxing income. The day will come when all this juggling and setting up of additional machinery and squabbles by various interests will be cut out. Such questions as when a child ceases to be a child, what fabrics are luxuries, and so on, will be done away with, and people will have to pay directly according to their incomes. The Chancellor's job will then be much easier and he will be able to justify it and not have to


apologise for it. The real argument he has used is that people will come to him representing special interests and urging the exemption of certain items from the tax, and that if he allows some to go through the sieve, it will leave a hole through which many others will slip.
In column 3 I find charabancs and omnibuses going through the sieve free of duty. If they do not make a hole big enough to let through a baby Austin, let alone a baby's cot, I do not know what will. Agricultural machinery also goes through the sieve and comes out intact. Agriculture is getting a good deal of help nowadays, and agricultural machinery is to go through without paying tax. When it comes to the machinery of the school child, pens and pencils and copy books, the poor father or mother has to pay on the tools of the child's industry. No doubt the average healthy-minded child would be grateful to the Minister if he would tax them out of existence altogether.

Sir Joseph Lamb: Would the hon. Member compare them with agricultural implements in the sense of their being productive implements?

Mr. Woods: Certainly. Perhaps the hon. Member, who is always so anxious about agricultural interests, would like to treat them as wasting assets. A typewriter in an office is doing as necessary work as agricultural machinery or any other machinery. The point I am making is that the Chancellor is trying to get away with the plea that if we press him into making concessions on this article or that we shall in the end force him into the position of having to let all sorts of other articles escape the tax. The Chancellor cannot put that across the Committee at a time when he is ready to let charabancs escape. Why charabancs? Who makes the profit out of charabancs? Who uses them? Does he want the engineering industry to turn to the making of charabancs with the idea that they will then be exempt? If the Bill exempts such things as agricultural machinery and charabancs we believe that the baby's cot should be exempt, and that the country would not be the worse off, but the better. I hope the Committee will not be too much impressed with the argument of the Chan

cellor that he cannot make a concession here or there because he would be on the slippery slope. He is right over the edge of the slippery slope, and it is for us to see that he does not go crashing to the bottom.

8.2 p.m.

Mr. David Adams: I am glad of the opportunity to oppose this Purchase Tax. I am rather surprised at the statement we have heard from the Chancellor, though perhaps it was the best he could make in the circumstances. He mentioned the concessions that he had made, particularly from the constitutional point of view. In my judgment it is presumptuous on the part of the Chancellor or the Treasury to ask for arbitrary powers which really belong to this House. It was no wonder that there was general opposition to that claim. Then he tells us that he has made concessions in the matter of children's wear, but an examination of the Schedule shows that there is a vast mass of things needed by the industrial workers which will bear the tax. It has been shown that in that taxable field of £600,000,000, no less than £110,000,000 will be subject to tax. When the Budget was introduced the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) reminded us on this side of the Committee that we were in a Coalition Government. That was a mild way of advising us to be prepared to repudiate some of our principles. If we assent to this tax we shall certainly repudiate the doctrine of equality of sacrifice, for this tax is most burdensome to the working class. It has |no relation to the income of the family or individual. Not only the breadwinner but every member of his family will be called upon to pay tax. It will definitely depress the standard of life where it is already low and outside the ambit of war profits.
It is a tax which will stride at the miner in Durham who for years has been unemployed or under-employed and obtains no benefits out of the war. The miners Durham and Northumberland are in for a period of substantial unemployment through loss of European markets, and there is nothing which the Government can do which can prevent that collieries in the county of Durham did not work last week and are to work


short-time this week. There was an excellent commentary upon this tax to be found in a leading article entitled "Planning for Peace" in the "Times" on Monday:
The national standard of living stands urgently in need of overhaul; for however depleted our resources there are some whose standard not only cannot be lowered, but must imperatively be raised.
Even if the Chancellor were to make the concession that all the articles were to be put into the second lisit in the Schedule the burden would still fall upon the workers and not upon the richer section of the community. No one denies that the rich have benefited by war, but they will not spend their surplus upon necessities. The workers have no option in the matter. They cannot avoid payment of the tax, because any extra which they spend must be upon the necessaries of life. After the years of half employment which they have endured the miners in county Durham will be attempting to re-clothe their families, to replace the old bedding, etc., and they will be called upon to pay taxation when performing this very elementary duty to themselves and, really, to the community. The Chancellor asks us to remember his difficulties. We do remember his difficulties. Undoubtedly it would have been equitable, if he must have the money immediately, to obtain it through a graduated Income Tax. No one could cavil at the justice of that. But in my judgment the Chancellor is bound to be acting inequitably until he introduces a capital tax, not a capital levy once and for all, but a capital tax that would mean that each year the capitalist would hand over a certain number of his industrial shares.

The Temporary Chairman: We must not go into other taxes. The discussion on this Clause has already been sufficiently wide.

Mr. Adams: I bow to your Ruling, Mr. Williams, but the Chancellor did ask us to remember that he had to find the money and I was indicating a direction in which he could do so. Sooner or later that solution will have to be followed. I noticed in the Press this week that one newspaper had observed 30 large motor cars outside a West End night club at 11p.m. The newspaper mentions that there is a growing luxury in certain

circles. It is clear that the people concerned should be reached by the Chancellor to help him to meet his requirements. Presumably, I am not permitted to enlarge upon this matter, but the disparity between the treatment of the well-to-do and the treatment of the working classes might well be looked into. Certain large companies have expressly stated that they will not lend money to the Chancellor at his 2½ per cent. I see that Sir Robert Kindersley says there is a serious fall in the purchase of War Bonds.

The Temporary Chairman: I am sorry to call the hon. Member to order again, but on this Clause he cannot refer to anything but the Purchase Tax.

Mr. Adams: I conclude by saying that it is very gratifying to notice that the Prudential and distillery companies have decided to employ some of their resources at 2½ per cent.; but large numbers of companies have decided not to do so and to wait for a higher rate of interest. At the same time, the trade unions—

The Temporary Chairman: I must ask the hon. Gentleman again to keep strictly to the Clause that we are discussing, which has nothing whatever to do with rates of interest or with trade unions.

Mr. Adams: I will conclude by stating that when the industrial workers have, through their unions, placed at the disposal of the Chancellor the whole of their resources free of interest, it is a commentary on the general conduct of the Government. Whether there is a Coalition Government or not, I will certainly proceed into the Lobby, if we are called to vote against this monstrous and unjust tax.

8.14 p.m.

Mr. R. C. Morrison: As a loyal and enthusiastic supporter of the Government I think the Government have made a profound mistake in proceeding with the tax. When the predecssor of the Chancellor took himself off to another place, I was hopeful that he would take his tax with him, but it was not to be. Therefore, I take the opportunity of saying that I think the Government have made the first major mistake since they were formed in proceeding with the tax, which will cause the maximum of irritation at a time when it is desirable to allay irritation. We have


heard a great deal here about some organisation with which I am not acquainted, and called, I believe, "Cooper's Snoopers." It will have plenty of work to do when this tax is at work in going round and noting a considerable amount of irritation.
What shall we get out of it? Enough revenue to keep the war going for a fortnight, on the basis of present expenditure. For that return, we propose to start irritation and discontent throughout the country. I think I am not over-stating in saying that the working people of the country will probably be called upon to pay at least four-fifths of the tax. If the Financial Secretary to the Treasury or the Chancellor of the Exchequer think it will be possible to raise £100,000,000 or £110,000,000, from at least four-fifths of the working people without starting what everybody wants to avoid, a new move for increased wages which will cost the Government as much in the end as they will get out of the tax, they are confirmed optimists and will be badly mistaken. Your Ruling, Mr. Williams, of a moment ago, prevents my making suggestions at this stage for other methods that might have been adopted. It was surely not beyond the wit of Members of the Government and their advisers to find a more direct way of raising a considerable amount of money without raising the irritation and discontent that will be caused by this tax.

8.18 p.m.

Mr. Viant: I agree with the hon. Member who has just spoken that the Purchase Tax can be guaranteed to stir up more irritation than any other proposal. It has been ill-conceived. We agree and sympathise with the Chancellor of the Exchequer in the carrying out of his duty to raise enormous sums of money, but we feel that our support is being unduly strained when we are asked to support a tax so vicious in its application as the Purchase Tax. Some of us would have been pleased at an opportunity to go into the Lobby and register our opposition to the tax, except that, on all sides of the House, we have endeavoured to avoid, during the war, anything in the nature of dividing the House. The Chancellor of the Exchequer has not given a due measure of consideration to our position, and that of the hardly-pressed masses in

the country, in including in this tax so many things which are needed in the ordinary households of the people.
In my constituency, many women are already anticipating the manner in which the tax will affect them. Quite a number of wives of serving men, who are already being compelled to seek public assistance to supplement their Service allowances, are already appreciating what effect this Clause will have upon the economic position of their homes and the hardship which it will have on their children. Had there been no other means of obtaining the money, one would have been able to sympathise with the position of the Chancellor of the Exchequer, but there are other avenues which could have been explored and proposals which would have had an incidence more equitable in its effect. No one can argue that the Purchase Tax will apply with equality to all sections of the community. The more hardly-pressed the family may be at the present moment the more harsh and hard will be the effect of this Purchase Tax upon their position. I am glad to have had the opportunity of expressing those sentiments regarding the inequity of this tax, and I rather wish that I had an opportunity of registering a protest in the Lobby.

8.22 p.m.

Mr. Glenvil Hall: I agree wholeheartedly with my hon. Friend who has just sat down, and for my part, if this Clause is taken to a Division, T shall have the utmost pleasure in going into the Lobby against the Government, because I think, as was said a few minutes ago by my hon. Friend the Member for North Tottenham (Mr. R. C. Morrison), it is a pity that the Purchase Tax was not taken to another place with the ex-Chancellor of the Exchequer. It is a bad tax; it will create a tremendous amount of irritation throughout the country; it will hit the poor much more severely than any other section of the people, and I am not at all sure that the Chancellor will get in as much as he says he will. It will also penalise those with large families. There is not the slightest doubt that poor people with large families will pay far more than other people who have smaller families or have no children at all. Not only will it bear hardly on the vast mass of the people, but it will also cause a good deal


of heart-burning, and as far as I can see, it will be very difficult to work. To begin with, as has been said by other speakers, its incidence falling as it does upon the wholesaler means that the consumer undoubtedly will in many cases pay far more than the tax. It will be passed on by the wholesaler, and by the time it reaches the consumer far more than the original tax which goes into the Exchequer will be extracted from the pockets of the consumer.
With regard to furniture and children's clothes, it is true that in the Schedule, children's clothes, if made up, will be exempted, but I have yet to learn that if a mother buys the cloth to make up the dresses for her little girls, as many mothers do in my constituency, she will find that that cloth has been exempted from the tax. Perhaps the Financial Secretary to the Treasury, who is to reply to this Debate, will be good enough to say whether cloth so bought, in my constituency at any rate—and I expect in other constituencies—

The Temporary Chairman: There are Amendments on the Paper dealing with this point, and the hon. Member must keep away from such matters at the moment.

Mr. Hall: Of course, I bow to your Ruling. Perhaps I was trespassing beyond the bounds of the Clause. I will therefore content myself by saying—and I believe that the Chancellor of the Exchequer is already aware of it—that there is very considerable feeling in this Committee on this matter. That is shown by the number of Amendments which have been put down and which cover many pages of the Order Paper. I hope that "we shall fight this part of the Bill through to the bitter end, and that those who support the view which we are putting forward, will go into the Lobby with us in order to defeat what is an inequitous tax.

8.26 p.m.

Mr. Naylor: I am afraid that at this stage of the discussion there can be very little left that has not already been said, and therefore I need not explain that to avoid repetition I shall not detain the Committee, as we are all anxious to get into the Division Lobby and record our vote against this Clause. When the ex-Chancellor of the

Exchequer introduced the Purchase Tax in the earlier Budget he said that this tax was imposed for two reasons. The first reason was that money was required, and he thought it was a good plan to raise extra money in this way. The second reason was an economic reason, which was that there was a desire to limit production which was not necessary for the successful prosecution of the war. The present Chancellor of the Exchequer also used the same two arguments, but neither of the two right hon. Gentlemen ventured to estimate to what extent there would be a limitation of production. Although, strangely enough, an estimate was given as to the amount of revenue that would probably be derived from this tax, yet on the economic side no suggestion was made as to the advantage to industry generally by the reduction of production in these departments and as to whether the one would balance the other. Perhaps, if the Financial Secretary is closing the discussion on this Clause, he will tell us how it will bring about a more economic distribution of the labour that will be displaced by the imposition of this tax—and not merely displaced, but deliberately displaced, because both Chancellors of the Exchequer have said that it is in the interests of general production in the conduct of the war to release the labour that would not be required, for the reason that consumption of the goods subject to the Purchase Tax would be greatly reduced and would thus release labour for more utilitarian purposes. For that reason I ask him for a little elucidation of the economic advantages of this tax.
It is obvious that the amount of tax to be put upon these commodities will increase the cost. That has been said over and over again. It will add to the cost, not only the amount of the tax, but the percentage of extra profit that will be made on the higher-priced article. It is really impossible, even for the Chancellor of the Exchequer, to estimate what revenue he will derive from this tax. I am certain that the estimate of the Treasury will be found to be far in excess of the actual yield. If it should happen, as it probably will in the case of many articles mentioned in the Schedule, that the demand falls away considerably, it will mean not only that the poor will have to do without certain things which they


have hitherto regarded as necessaries, but that the estimate of the yield will not be fulfilled. I should like to know on what the estimate has been based, and whether the Financial Secretary to the Treasury is confident that it will be fulfilled. There is one technical point that I want to raise in connection with Subsection (2, a), which says:
any purchase, made from a wholesale merchant or manufacturer.
In the case of newspapers, for instance, who are the wholesale merchants, and who are the manufacturers? Is the tax to be imposed on the copies printed by the proprietors or upon the quantities sent out by the wholesaler for retail purchase? That makes a great difference in the incidence of the tax. The price of a newspaper, whether it is a daily or a weekly, is fixed. If you put the tax upon the source of production, the proprietor would either have to pay the tax out of his profits— in which case he would still issue the newspaper at its present price—or he would increase the price of the newspaper to the wholesalers. In that case, it would seem, the Treasury would be in some difficulty as to which was the right tap to turn on. Newspapers are in a separate class from the ordinary commodity, because the prices are fixed. The Treasury has to determine whether the proprietor, who is the manufacturer, has to pay the tax, or whether it is to be paid by the wholesale distributor to the newsagent. It makes a great difference in what happens to the completely taxed newspaper when it reaches the purchaser.

The Deputy-Chairman (Colonel Clifton Brown): The time to deal with this matter will be when we reach the Amendment which deals with newspapers. I thought that the hon. Member was merely giving an illustration.

Mr. Naylor: I thank you for that direction, Colonel Clifton Brown; but I was really dealing with the actual wording of this Clause. I am trying, somewhat imperfectly perhaps, but diligently and to the best of my ability, to get some explanation from the Financial Secretary as to the application of the words in this Bill relating to purchases
made from a wholesale merchant or manufacturer.
I was pointing out the difficulty of distinguishing between the two possible

sources of revenue. I am anxious to know whether the Treasury are going to impose this tax upon the newspaper proprietors, or whether it will be paid by the wholesalers. With these remarks, I wish to declare that, in company with many others on these benches, I intend to vote against this Clause.

8.37 p.m.

Mr. Malcolm MacMillan: A chief characteristic of this Debate is that everybody seems to be unwilling to divide the Committee. A greater danger than that is the effect of dividing public opinion on such measures as this which affect people so directly in their everyday life. Another remarkable thing is that nobody on this side has said a word in support of the Bill, except my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence). It puts him and us in a difficult position if nobody on this side can support the Chancellor as completely as he asked us to do in his opening remarks. The Financial Secretary will remember the sincere good intentions of the Government in regard to the Prices of Goods Act. Already, it is clear that their intentions have not been fulfilled. A rise in the cost of living by something like 32 per cent, shows that the Act has not been effective. In addition to that rise in the cost of living, we are to have the effects, especially on the poorer classes of the community, of the tax that we are now discussing. We are driving people into bulk purchase of cheaper goods. It will put a premium on shoddy, to tax the better qualities of goods, as we are doing. We are forcing the poor into economies with which they are already too familiar. We are forcing them to try to give up buying the more and more expensive goods, and to purchase larger quantities of cheaper quality goods. We are thereby threatening the health standards of the people, which is a thing that we cannot afford to do at the present time. I do not think that the Chancellor of the Exchequer needs to be the least bit tender about taxing luxuries, if necessary, out of existence. The argument will admittedly arise that the revenue will disappear if people stop buying luxuries, but that is not so extremely important as the labour that is wasted on the production of luxuries, which could be better employed on the more productive needs of the war. If in a total war, we cannot use our labour


more usefully than in luxury production, then we are still not waging total war in the economic field and in the field of labour.
The Chancellor promised careful—he did not say sympathetic—reconsideration of the tax on knowledge and on information. We have on the one hand set up an expensive and elaborate machine—the Ministry of Information—and we ought to be supporting that Ministry as much as possible by subsidising the supply of literature rather than taxing it. I understand the Chancellor of the Exchequer is particularly sympathetic in regard to giving reconsideration to the taxing of textbooks, and I hope that he will give it his most sympathetic consideration. There is also the question of technical books, which come under textbooks. The statement of the Minister of Labour to-day that we are to have hundreds of thousands of men and boys brought into the technical training scheme will mean that there will be a greatly increased demand for technical textbooks which, next to legal tomes, are one of the most expensive kinds of textbooks. I hope that he will give special consideration to the position of those who take advantage of the offer of the Minister of Labour and have to purchase such books.
We as a party, whatever the declarations of individual Members may be, must, in our hearts, be against any tax upon information, truth and knowledge. If a tax is put upon "Mein Kampf" and other fiction, and, equally, we are to tax the Bible, textbooks and other educational books, it will mean that there is something sadly wrong already with the Government's mentality. It is a financial censorship; an intellectual plague of darkness. I cannot imagine that the Ministry of Information could have been consulted as it ought to have been. Moreover, it affects this party more than perhaps any party in the country, because our people in general throughout the country cannot afford to pay such a tax. This may be only the beginning of a creeping barrage of taxation upon newspapers and books especially. The workers can afford least of anybody to pay a tax upon literature and upon informative and political books, so that the proposed tax is really in the nature of a political tax as well.
There is another aspect of this tax. Educational authorities which supply

books to schools will have to meet the tax out of local taxation, and it will be a very serious burden upon them. I hope the Chancellor of the Exchequer will give that point sympathetic consideration too. Education has suffered terribly already in this war. In Scotland, at any rate, we are determined to resist more attacks on education. I must declare myself against the tax, but what we shall do about a division is an extremely difficult question. It is an absolute blackmail position at the moment. We are anxious not to divide this Committee; but we are anxious, above everything else, not to divide public opinion on this question at this time when the national interest is so important. And this proposal in general will have the effect of putting up prices, and for that reason it will largely penalise the poor. It cannot be pretended that it will hit people equally or that there will be complete equality of sacrifice. The rich will still buy what the poor can no longer afford.
There is one final point that I want to mention in relation to the effect of these taxes. If the demand for certain goods in common use is to be diverted towards the purchase, instead, of cheaper substitute goods, it will cause local pockets of unemployment and will put out of use men and plant in some areas and cause a sudden increased demand in other areas and directions. There will be chaos in areas producing certain of the commodities coming under this Bill.

8.45 p.m.

Mr. Ellis Smith: I do not intend to detain the Committee for more than a few minutes, as the ground has already been well covered, but we on this side of the Committee and others must realise that there is only one way to avoid paying for a war, and that is, not to have a war. The war is here, and therefore, our problem is, how to pay for it. I associate myself with hon. Members on this side of the Committee who have protested against this tax, and I want to confine myself to the main principles of it. My interpretation of the objects of the Clause, if I understand it correctly, is that they are, to raise revenue, restrict luxury and restrict consumption. I listened to the reply of the Financial Secretary on the Second Reading of the Bill very carefully so that I should be able to understand the object of this Clause. It is upon the basis of that reply


that I have stated what I consider are the main principles of the Clause.
I agree to the proposed tax on luxuries. But what is a luxury? I also agree that consumption must be restricted, but will this tax achieve that object? Could it not have been done in a fairer way? I am convinced that the object of the Clause could have been secured in a more scientific way than is provided for under the wording of this Clause. According to the statement which the Chancellor of the Exchequer made when introducing the Finance Bill, £8 out of every £9 raised by this tax will come from the poorer sections of the community. In order to give a concrete illustration of how these principles will apply, I will take the case of a pair of boots. In September, 1939, they would have cost 10s., and in July, 1940, they would have cost 13s., but after the application of the principle contained in this Clause when the Bill becomes an Act that same pair of boots will cost 15s. 9d. I have here an extract from the "Observer" of 28th July, which contains interesting advertisements when one considers how our people will be affected by the putting into effect of the principles contained in this Clause. I see from the shop windows in Knightsbridge, which I passed this morning, and the advertisements in the "Observer," that model gowns are still being sold for £5, and that fur coats are being sold at £89, £98 and £130. Therefore, I have no hesitation in saying that there is something wrong with taxation when the wholesale price of boots can be increased from 10s. to 15s. 9d. as a result of the increased cost arising out of the war, and we raise no objection to that. But we do raise an objection to the increased cost of certain goods because of the application of the principles contained in this Clause. When it is considered that people can still afford to pay anything from £80 to £150 for a fur coat, and all that that means, we would be lacking in our duty, in spite of the fact that we are supporting this war, if we associated ourselves with a tax which will bear so hardly on the poorer sections of the community.

8.50 p.m.

Mr. Gallacher: I want to associate myself with the opposition to this Clause. There has been much talk about workers

earning colossal wages, but workers who put in 90 hours a week have a right to the higher wages they obtain by doing extra work. But I represent a constituency of miners and agricultural workers. Is there any Member in this House who would suggest for one moment that the miners and agricultural workers there are getting more than a bare wage? Is there any Member who will deny that there is already poverty in my constituency? Any hon. Member who will come with me to my constituency, or go to that of the hon. Member for South Shields (Mr. Ede), will find men and women suffering from chronic poverty and paying in sweat, blood and tears for the bankrupt politics of the decadent ruling class of this country. Hon. Members may mutter, but it is true. Now, in addition to having to endure their poverty the burden of the war is being placed on these people. How many Members on the other side would like to work shift after shift for week after week for £3 or £2 10s. a week?

Mr. Levy: Is the hon. Member appealing to passionate emotions?

Mr. Gallacher: The hon. Member is very anxious that nothing of an emotional character should be said in this House, when we are discussing finance. He has made that plea on several occasions. He does not care how much emotionalism is displayed in stimulating workers to greater efforts or stimulating others to rob the workers, but when it comes to a question of cash he does not want any emotion. He has told us on another occasion that all he wants is a fair, just and equitable profit. That is his philosophy—profit. If the hon. Member, or any right hon. Gentleman on the Front Bench, had to work hard all the week in a dangerous occupation for £2 10s. and had to face a tax of this kind, would there be emotion? Plenty of it. This tax will increase the poverty of the ordinary poverty-stricken workers, while the wealth of the rich in this country is increasing. Do not talk to me about Income Tax and Super-tax. The facts are that the millionaires of this country are increasing in number. This tax is directed against the masses of the people. To those who have money to spare and need only write a cheque, it does not mean much if they have to pay a shilling or two or a pound or two extra. But the housewife does not take up a


cheque book. She has to count every penny and finds it almost impossible to obtain sufficient food for her family. The hon. Member opposite who smiles may think this is a good joke, but he will probably spend as much on a dinner to night as some housewives have to spend for food for the week. It is easy for him to laugh and shut his eyes as to what is going on, but one of these days the hon. Member may get his eyes opened. Consider the language which has been used in this House about the workers and their big wages. This Clause implements the appeals which have been made to take away from the workers their rightful earnings. Consider that and then the miserable appeal made by Sir Robert Kindersley to the bankers to be patriotic and subscribe to Government loans—

The Deputy-Chairman: The question of subscribing to Government loans is certainly not in order on this Clause.

Mr. Gallacher: I am sorry if I have transgressed but I thought it worth while to try to compare the difference between the attitude adopted to the workers and that shown to the banks, who are piling up wealth all the time. The spokesman for the Government yesterday drew attention to the fact that the Nazis were using Gestapo methods and exploiting the masses of the people on the Continent, a-id that this could easily lead to revolutions. Hon. Members opposite are prone to speculate on revolution on the Continent. It seems to them to be very desirable. It reminds me of the well known lines of Russell Lowell:
I du believe in Freedom's cause. Ez fur away ez Paris is.
There are certain Members in this Committee, representatives of the Government and their supporters who are deliberately following the Nazi methods.

The Deputy-Chairman: The making of charges against hon. Members has nothing to do with this Clause. The hon. Member must keep in Order.

Mr. Gallacher: The Clause represents one of the methods of attack on the masses of the people of the country which will have repercussions not to the liking of Members opposite.
Question, "That the Clause stand part of the Bill," put, and agreed to.

CLAUSE 19.—(Chargeable goods and rate of Purchase Tax.)

9.0 p.m.

Mr. Barnes: I beg to move, in page 13, line 40, to leave out "or second."
The purpose of the Amendment is to delete the items in the second column of the Schedule. On the last Clause I gave certain figures with regard to the relative yield of the second and first columns. Now I should like to put that into bulk figures. Probably those uninformed on the bulk of commodities in the industries and trades covered by these descriptions might be inclined to assume that the bulk of the revenue from the tax would be raised in the first column, but that is not so. Of the £110,000,000 which the Chancellor of the Exchequer is aiming to raise, I estimate that £88,000,000 will come from the groups of commodities covered in the second column. Therefore the pretence that the Chancellor is able to make a differential tax of a sixth and a third is seen to have no substance in fact and is merely a cover for an effort to raise the substantial sum of £88,000,000 out of items of ordinary domestic, daily use. Even in the first column many of the items are of a domestic character. I am, therefore, not over-stating the case when I say that the bulk of the taxation will be raised on ordinary items of domestic consumption.
It is significant that of the vast sums which have been raised since the outbreak of the war this is the first tax which has started a serious controversy. I am confident that the controversy is not on the issue as to whether this sum is to be raised, or whether the wage earners should contribute this sum, or any proportionate sum, in taxation. The controversy was begun, and I believe it will grow in volume, because of the inequity and the repercussions of this tax. The large amount of taxation which the Chancellor has imposed in the form of direct taxation on incomes and additional taxation on luxuries has been generally recognised to be fair, and even if the lower incomes had been included, I do not think there would have been the resistance which this tax has created. It is true that the British people may look at an increase in direct taxation rather ruefully, but on the whole they are prepared to grin and bear it. But the Purchase


Tax—and especially the group of articles in the second column of the Schedule—is repugnant, and will become increasingly so as people become aware of its incidence. It is unfair and bureaucratic, and it is a wrong way of arising the sum that is required from the wage-earners. As was said in the discussion on Clause 18, it will have a vicious impact on prices and wages. Those of us who have had experience of the incidence of taxation of this sort on a large volume of employment and industry are certain that this taxation will dislocate employment—

The Deputy-Chairman: The hon. Member is now making an argument against the whole tax, the principle of which the Committee has just decided on in Clause 18. The hon. Member's Amendment is to omit the reduced rate of tax, and he must apply his arguments to that, and not to the whole tax.

Mr. Barnes: The Amendment which I am now moving affects the group of commodities in the second column, which will raise £80,000,000 of taxation. The Amendment covers garments and clothing, which the Chancellor himself admitted represent a spending power of £315,000,000. If you read down the second column, which covers articles of earthenware, semi-porcelain for table and kitchen use, sanitary ware, glassware for kitchen use, and so on, I think you will realise, Colonel Clifton Brown, that the Amendment touches the main field of employment which the Purchase Tax will affect. If you take that into consideration, I think you will see that my argument is not unconnected with the Amendment. I was pointing out that the impact on prices and wages, and the interference with these trades generally, will have a rather injurious effect on employment in these trades. The proof of that is to be found in the fact that as a result of the Measure limiting the production of these industries, particularly the textile industry, they have already been seriously affected in the matter of employment, and if a further heavy tax of this sort is imposed upon these goods, it will be bound to affect employment.

The Deputy-Chairman: If the hon. Member is arguing that because his Amendment covers a large field, he may argue the decision to which the Committee

came on Clause 18, that is a contention which I cannot admit. I cannot allow him to go back to a Clause which the Committee has already passed.

Mr. Barnes: I am not arguing that point. I am arguing that the Committee is faced with a problem that by taxation imposed in this way we are in fact dislocating employment. Surely that is a material point to recognise, especially in view of the fact that there has been a recent increase in unemployment figures. It is bound to have repercussions on Government policy, and whereas the country may be prepared to see dislocation in employment if it arises out of direct war circumstances, public opinion will be by no means so generous in its attitude to the Government if unemployment is increased as a result of such taxation, especially occurring at a time when the Government are not absorbing displaced labour in munition production.
I wish to deal now with Government contracts and expenditure as a result of rising prices. This tax arises from the fact that the expenditure of the Government is reaching nearly one-half of the income of the nation. That means that the Government, in spending this money—

The Deputy-Chairman: I am afraid I must interrupt the hon. Member again. The Amendment is quite limited in character, namely, to omit the second column. We cannot therefore go into the whole financial policy of the Government. It is merely a question of whether this column should be omitted.

Mr. Barnes: In view of your generosity on the previous point that I raised, I do not propose to go further on this question of Government contracts, although I think it is a very material point. May I turn now to the direct effect of the tax in the second column on specific terms of clothing? The range of goods that I intend to quote are the cheaper type of goods. I do not wish to exaggerate my case, and therefore I am not choosing the higher-price range of articles. In the case of ladies' shoes the pre-war price was 6s. 9d—and no one would argue that 6s. 9d. for a pair of shoes represents an extravagance. The price has already risen to 9s., and this tax, as it falls in the second column of the Schedule, will impose an additional burden of one-sixth


on the 9s., which brings the increase in price to 55 per cent. In the case of gentlemen's shoes the pre-war price was 12s. 6d. and is now 16s. 3d.—these are wholesale prices. The Purchase Tax in the second column will add 2s. 6½d., making a total increase in price of 52 per cent. Pre-war serge suits were selling at £2 7s. 6d. and are now selling wholesale at £3. With the tax at one-sixth, it will bring the price increase to 47 per cent. A cheap raincoat which was 14s. pre-war is now selling at £1s 1s. wholesale; the tax in this column will add 3s. 6d., bringing the total increase in price to 69 per cent. A galvanized bucket usually priced at 10d. is now 1s. 4½d., and the tax will be 2¾d., making the increase in price 92 per cent.
Let us see the effect of the second column on the average weekly budget of £4 a week. The average amount which a family of that kind allocated for clothing was 9s. 5d. a week. That amount has already increased to 13s. 1d., and the tax will bring it to 14s. 10d. A family of that kind before the war usually allocated £1 7s. 10d. a week for the general range of articles covered by the second column. It has already gone up to 1s. 16s. 11d., and the Purchase Tax will bring this expenditure to £2 3s. 9d. With regard to the retailer, he will have to carry this increased taxation into his charges. The figures I have given represent the bare addition of the tax. Every retailer, however, will have to find the capital for his business and will have to pay interest charges to his banker, and they will have to find their way ultimately to the prices of his goods.
My final point is with regard to the impact of this tax on prices generally and the larger issue of inflation. At a time when the Chancellor is concerned about whether prices move in the direction of inflation, it is a fatal mistake to impose on a vast range of items like those in the second column an addition of one-sixth to their cost. There is a gap between expenditure and revenue from taxation, and the Chancellor is doing a risky thing in giving such an impulse to a rise in prices over a vast field of working-class commodities. My Amendment covers all the domestic articles in the second column. There are other Amendments on the Paper which deal with specific things, and it is a selfish thing for many Indus-

tries to seek relief from this tax because of its inconvenience to themselves and for hon. Members to overlook the problem of the great mass of housewives whom the tax vitally affects. This is essentially a housewife's problem. The items in the second column are the things the housewife has to consider in the daily expenditure of the weekly wage at her disposal. It is on the housewife that the irritations of food rationing and shortage of supplies fall with excessive severity, and I still claim that the Chancellor could have got the money required without adding to her burdens.
I do not often get the opportunity of listening to broadcast speeches by Ministers, but some time ago I heard the Minister of Labour addressing the housewives of this country over the wireless. His speech was one of the most moving recognitions of the services of the average housewife that I have ever heard broadcast. He said that housewives, and mothers generally, had stood up to the anxieties of the present time in a most remarkable way. I do not want to descend to sentiment or emotion in a debate of this kind, but I think every hon. Member will recognise that the sturdiness of the women of this country has played an important part in the determined, grim stand which the mass of the people are making. Without any emotion, but on the cold hard facts of the case, I say that this tax is a very poor reward to our women. I should like to make it clear that we intend to press this Amendment to a Division. We think that it goes to the heart of the issue we are debating, and I trust that we shall get such support in the Division Lobby as will indicate to the Chancellor that while we are prepared to assist him to get the requisite money we are not prepared to assist him in obtaining it in this way.

9.23 p.m.

Mr. R. C. Morrison: My hon. Friend has covered the ground so completely and so convincingly that I propose to add only a word or two in supporting this Amendment. The thing that, to use a common expression, "gets me beaten," is that we seem to be following no fixed policy in imposing this particular taxation. For the first few months of the war the policy of the Government was to keep prices down. That was expressed in the Price of Goods Act, which was in-


tended to keep prices down, and also in the subsidy which the right hon. Gentleman's predecessor announced was being given to foodstuffs. We spend £53,000,000 a year in order to prevent the price of food rising. This new tax is a direct contradiction of that policy. I cannot see the consistency in subsidising foodstuffs by more than £50,000,000 a year in order to keep down prices and at the same time putting taxes to the amount of £110,000,000 a year upon food and clothing and the necessaries of life.

Hon. Members: Not food.

9.25 p.m.

Mr. Woods: The Chancellor of the Exchequer appears to be a little inconsistent with the Committee. We did not push the last Question to a Division because we might have put ourselves in the position of doing away with the tax altogether. That is not our attitude in the least. I think the Chancellor and the Committee understand that that is not our intention at all. We are satisfied that there is a vast area of consumption which is wasteful and extravagant in normal times and which amounts in war-time to crime. The Chancellor, in devising this second column, has said, as it were: "Let us see what is necessary, the purchase of which is inescapable in the average home, and we will put it into column 2." He has not succeeded in doing so. We shall, at a later stage, move that certain articles in the first column be transferred to column 2.
If we are defeated on this Amendment, and column 2 survives, the Chancellor will probably say that, by passing the Amendment, we should have been ruining the beautiful little scheme upon which he has been so much complimented. The scheme brought forward by his predecessor was a monotonous sort of thing. It had only one grade. We are so used to first, second and third classes that it seems only British practice to include most of the things in the second and third classes so that they can get through at half price. It must not be implied from the Amendment that we want to get back that one-grade railway. As I see it, if it is once conceded that there is justification for two grades there is no reason for not increasing, and having a whole range of taxation rates until you reach the point of practical extermination of the sales

of imported commodities which consume foreign currency, and so forth.
It is not because we are enamoured of monotony, but because we feel that it is a bad principle to make people pay more than is necessary, that we support the Amendment. Any tax upon things that are vitally necessary for life is a tax upon life. I do not sec how anybody can get away from that conclusion. Things that can be dispensed with, can be taxed, and so can the things that are within the purchasing capacity of certain privileged classes only. This general principle is widely accepted, whether we realise it or not, by the people, in a vague and instinctive way. If that organisation now known as "Cooper's snoopers" go round after Budget time, they will find, in regard to the increased duties on tobacco, tea and sugar, the usual comment that if you do not want to pay the duties, you can do without the goods. In the present case we have a list of commodities which include things without which we could not continue to exist and from which there is no escape. I would point out that the old age pensioners have to have clothing. They must have some bedding, pots and pans.
Now let me get back to the argument that was used with regard to the slippery slope of exemptions. We did not have a reply on the previous discussion to the question, What is the ground for justifying the exemption of agricultural implements when the implements of every household will be taxed unless this Amendment is carried? If it is a sound principle to give exemption from taxation to the machinery which produces potatoes, then it follows that the pan in which those potatoes are cooked and which makes them available for personal use should also be exempted. I cannot see that there is any logic in taxing them. The Financial Secretary obviously has not an answer to it; he appears to have gone to look for one. I shall be interested if he can find an answer to that question. In his previous argument he said he wanted to be logical and consistent. We maintain that articles which are necessary for life should not be taxed.
Now let us take some of the consequences which will follow from this tax. I do not know to what extent I shall be in Order, so I shall feel my way gingerly. The bulk of the revenue from this tax


will come from the items in this Schedule. As every dealer knows, column 2 covers those commodities which are known in trade as bread and butter commodities. They are the commodities which the average shopkeeper buys consistently month by month and year by year, because he knows that they are things which will be needed in every home throughout the length and breadth of the country and he is perfectly safe in purchasing them. These commodities represent pretty well the most stable interests in industry and the most consistent employers of labour, because they are so closely related to life and there is little speculation, about them. The interference to these commodities by the added taxation means that there will be a direct consequence in employment, and that while the Government are not in a position, even at the present time, to absorb or to reabsorb into industry those already thrown out by the dislocations caused by the war, I think that before there is any dislocation of industry as a direct consequence of the imposition of this tax upon these vital commodities the Government should ensure that the displaced labour will be re-absorbed and that the harden on the country will not be increased by additional taxation.
The point has been raised—and I do not want to stress it further, but I think that it is a matter that we should keep in mind—that if a charge of inconsistency is made, then the main cause is the Government's policy. The Government's policy has become a joke.

The Deputy-Chairman: On an Amendment to a Clause in the Finance Bill the hon. Member is going rather far when he discusses Government policy.

Mr. Woods: I was calling attention to the response that I received from the Front Bench opposite. You were looking elsewhere, Colonel Clifton Brown, and did not appreciate it. The point I was making was this: The Government have recognised the vital necessity of keeping down the cost of living and making it as easy as possible in war-time to go on living. Foods vital to life are being subsidised to the extent of over £50,000,000, but clothing, which is equally necessary to life, is to carry the burden which compensates for vital foodstuffs. Wiry should any Government set up elaborate and complicated machinery, on the one

hand, to subsidise foodstuffs, and, on the other hand, set up elaborate machinery for the registration of all traders, and then finish up within a few millions of pounds of where they started? There is a sound and logical argument why, in the interests of national economy, in the interests of the will of the people to support the Government to secure victory, in the interests of employment, and in the interests of common decency, this Amendment should be supported.

9.36 p.m.

Sir K. Wood: I think it would be advisable for me to say a. few words now by way of reply. I know that hon. Members opposite want to go to a Division. I am rather disappointed at their attitude. I know their feelings in regard to this tax, but the differentiation in the tax has been made in response to a feeling which has actuated a good many of their colleagues opposite. My hon. Friends opposite will remember that when the original Purchase Tax Bill was brought in, it provided for a simple tax, making no differentiation of any kind. Representations were made to me that a good many difficulties, and perhaps injustices were involved and it was in response to that suggestion that the differentiation was made. It is a mistake to say that T described the first part of the Schedule as being confined simply to luxury goods. What I said was that goods subject to the full rate were either luxury goods or those which, in the hard circumstances of the war, we could do without, or of which we could postpone replacement.
As to the second column of the Schedule, I have endeavoured, I hope with some success, to place there goods which cannot absolutely comply with that description, but upon which some contribution should be made towards the cost of the war. I hesitate to differ on this matter from my hon. Friends opposite, but my own view is that the great majority of the people of this country will be willing to make the contribution asked for, in respect of both parts of the Schedule. I have not heard of anybody expressing the view that they would not be prepared, in the circumstances, to make some such contribution. We shall see when this tax goes through. There may be difficulties, there may be a certain measure of hardship, as with every tax, but I think it will be found that the


Purchase Tax will be just as willingly paid by that section of the community as Income Tax and Surtax are paid by others. From my own point of view, this Amendment would entirely defeat the object of the proposal. This Amendment, if it were agreed to by the Committee, would cost something like £50,000,000 out of the £110,000,000 which is estimated as the total yield of the tax in a full year. I think my hon. Friend opposite said that in this particular case £88,000,000 would be the rate of the burden of the tax, but obviously that is not so.

Mr. Barnes: I took as much trouble as I could to check it, and I think my figure was correct.

Sir K. Wood: I am not criticising my hon. Friend in that respect. I suppose that only the Treasury are really in a position to give an estimate, and their estimate is fairly accurate and on the conservative side.

Mr. Barnes: The estimate of the Treasury is on the conservative side.

Sir K. Wood: I think, as a rule, when they prepare the figures at the end of the year and the Chancellor of the Exchequer makes his annual speech on the Budget, a tribute is due to the accuracy of the estimates. I do not think that it would be useful to go through all the statements which my hon. Friend has made. I know how he feels about this matter, but I suggest to the Committee as a whole tonight, that I am endeavouring, in this particular respect, to meet the requests that have been made by hon. Members opposite, and I feel that the people who will have to bear this imposition will just as cheerfully and gladly bear it as other sections of the community. It has to be remembered in connection with the statement of my hon. Friend with regard to the effect on the poorer households of the country, that a great deal has been done by the Government, particularly in the last few months, to mitigate the position in that respect, and therefore I feel to-night that I can confidently ask the Committee to support what I regard as a vitally important part of this tax.

9.43 p.m.

Mr. Naylor: I share, as many Members of the Committee will share, the regret

of the Chancellor of the Exchequer that an agreement has not been found possible to enable us to secure the best possible results from this Bill. I note that the right hon. Gentleman said that he hesitated to disagree with the views expressed by my hon. Friends in favour of this Amendment. I will not inquire too closely into the cause of that hesitation. Is it that the right hon. Gentleman is not certain that he is doing the right thing in insisting upon retaining this second column? The Government have already admitted, in part, the principle for which we are contending. The Chancellor has separated the tax into two compartments. In the one case he considers that there will be no hardship at all in imposing the higher rate of tax, and in the other, where they may be included in the reduced tax, he admits that there would be hardship inflicted upon people in the event of their being called upon to pay the maximum amount. He gives us a second column.
I agree with my hon. Friend the Member for Finsbury (Mr. Woods) in expressing regret that the Chancellor of the Exchequer did not propose to separate the different classes of commodities into two or three more columns, carrying it, in fact, to use a general phrase, right up to the fifth column. We might, then, possibly have been able to accommodate ourselves to the application of the tax, if it were so modified. I feel, as so many others must feel, that there is a large mass of people whose view must be expressed in a matter of this kind. Even in this Committee to-night, as on many other occasions when the incidence of taxation has been discussed, we frequently hear hon. Members refer to the fact that as the result of an article being taxed the purchaser will have to pay more. If the tax is placed on food, the reproach goes out, "Your food will cost you more," but the incidence of the taxation does not work out in that way. Where food or any other article is affected men and women with a limited income do not pay more, or buy as much as before. They buy less, because they have not the wherewithal to pay the higher prices for the things they bought before. Therefore, the effect of this tax will mean that working people with fixed incomes and old age pensioners will get fewer of the things on which the tax has been imposed.
I represent a constituency where men and women are living from hand to mouth. It is one of the poorest divisions in London, where markets abound and where they have to be patronised for the reason that from them people can buy for consumption goods of almost every kind at the lowest minium prices. The effect of putting a tax on the goods which they consume and articles which they use means that those people will have to pay at least 25 per cent, more for everything they purchase. They will not be paying more for the same quantity as before; they will be paying more for less than they had before, and that is where injustice comes in and where the incidence of taxation is unfair. If you place a tax on the poor, they are obliged to consume and purchase less, but if you place a tax on the rich, it does not affect them at all. They have the same number of articles or goods, and the same quality, because their income is not limited so far as these purchases are concerned. Those who pay 100 guineas for a fur coat will willingly pay 150 guineas for the same fur coat if this Bill is passed. That is where the Chancellor will get his income, but on account of the diminution of the number of purchases by working people, he will be getting little or no revenue at all. I am sorry to see the Solicitor-General so occupied with con

versation with the Parliamentary Private Secretary to the Chancellor—

Sir Edward Campbell: My wife will not buy a fur coat at that price.

Mr. Naylor: Perhaps the wife of the Parliamentary Private Secretary will compare notes with the Chancellor of the Exchequer and come to a decision as to whether she will pay 150 guineas for a coat or buy a cheaper one at 100 guineas. The hon. Gentleman can take his choice of the two alternatives. I have lost all hope as far as the Chancellor of the Exchequer is concerned. I never knew a Minister of the Crown who could oppose an Amendment of this high principle so mildly and quietly and yet so determinedly. I do him the credit of saying that he does it from a sense of duty, because he believes that what he is doing is right, but he is in for a great disappointment if he thinks it will lead to financial success. Events will prove whether he is right or I am. I shall be quite willing to receive an apology from him 12 months hence if his estimates are wrong, and I shall be willing to tender one if they are right.

Question put, "That the words proposed to be left out, stand part of the Clause."

The Committee divided: Ayes, 124; Noes, 22.

Division No. 66.]
AYES.
[9.52 p.m.


Albery, Sir Irving
Goldie, N. B.
M'Connell, Sir J.


Allen, Lt.-Col. Sir W. J. (Armagh)
Gower, Sir R. V.
Macmillan, H. (Stockton-on-Tees)


Ammon, C. G.
Granville, E. L.
Maitland, Sir Adam


Anderson, Rt. Hn. Sir J. (Se'h Univ's)
Greene, W. P. C. (Worcester)
Makins, Brigadier-General Sir Ernesl


Beamish, Rear-Admiral T. P. H.
Grenfell, D. R.
Margesson, Capt. Rt. Hon. H. D. R.


Blair, Sir R.
Grimston, R. V.
Mayhew, Lt.-Col. J.


Boles, Lt.-Col. D. C.
Gunston, Capt. Sir D. W.
Milner, Major J.


Boulton, W. W.
Hannah, I. C.
Mitcheson, Sir G. G.


Bracken, B.
Hannon, Sir P. J. H.
Moore-Brabazon, Lt.-Col. J. T. C.


Broadbridge, Sir G. T.
Haslam, Henry
Morris, J. P. (Salford, N.)


Brooks, H. (Lewisham, W.)
Headlam, Lieut.-Col. Sir C. M.
Morris-Jones, Sir Henry


Butcher, H. W.
Hely-Hutchinson, M. R.
Munro, P.


Campbell, Sir E. T.
Hill, Dr. A. V. (Cambridge U.)
Nail, Sir J.


Cary, R. A.
Hogg, Hon. Q. McG.
Nield, B. E.


Christie, J. A.
Hopkinson, A.
Paling, W.


Calman, N. C. D.
Horsbrugh, Florence
Pethick-Lawrence, Rt. Hon. F. W.


Craven-Ellis, W.
Howitt, Dr. A. B.
Pickthorn, K. W. M.


Crookshank, Capt. Rt. Hon. H. F. C.
Hudson, Capt. A. U. M. (Hack., N.)
Price, M. P.


Crowder, J. F. E.
Hume, Sir G. H.
Procter, Major H. A.


Culverwell, C. T.
Jones, Sir G. W. H. (S'k N'w'gt'n)
Pym, L. R.


Dalton, H.
Jowitt, Rt. Hon. Sir W. A.
Radford, E. A.


Davies, Major Sir G. F. (Yeovil)
Kerr, H. W. (Oldham)
Rankin, Sir R.


Denman, Hon. R. D.
King-Hall, Commander W. S. R.
Reed, Sir H. S. (Aylesbury)


Doland, G. F.
Lamb, Sir J. Q.
Reid, W. Allan (Derby)


Ede, J. C.
Law, R. K. (Hull, S.W.)
Rickards, G. W. (Skipton)


Elliston, Capt. G. S.
Lewis, O.
Ridley, G.


Etherton, Ralph
Lindsay, K. M.
Ross Taylor, W. (Woodbridge)


Evans, D. 0. (Cardigan)
Little, Dr. J. (Down)
Rothschild, J. A. de


Evans, E. (Univ. of Wales)
Llewellin, Colonel J. J.
Russell, Sir Alexander


Foot, D. M.
Lloyd, Major E. G. R. (Renfrew, E.)
Samuel. M. R. A.


Frankel, D.
Loftus, P. C.
Scott, R. D.


Fraser, Captain Sir Ian
Lucas, Major Sir J. M.
Shaw, Captain W. T. (Forfar)


Fremantle, Sir F. E.
Lyle, Sir C. E. Leonard
Smiles, Sir W. D


George, Major G. Lloyd (Pembroke)
McCallum, Major D
Smith, Rt. Hon. H. B. Lees- (K'ly)




Semervell, Rt. Hon. Sir Donald
Ward, Lieut.-Col. Sir A. L. (Hull)
Womersley, Sir W. J.


Southby, Commander Sir A. R. J.
Ward, Irene M. a. (Wallsend)
Wood, Rt. Hon. Sir Kingsley


Storey, S.
Waterhouse, Captain C.
Woolley, W. E.


Strauss, H. G. (Norwich)
Wells, Sir Sydney
Young, A. S. L. (Partick)


Stuart, Rt. Hon. J. (Moray and Nairn)
Weston, W. G.
TELLERS FOR THE AYES.—


Thomas, J. P. L.
Williams, C. (Torquay)
Major Sir James Edmondson


Tinker, J. J.
Williams, T. (Don Valley)
and Mr. Whiteley.


Wakefield, W. W.
Willink, H. U.



Walker-Smith, Sir J.
Winterton, Rt. Hon. Earl





NOES.


Adams, D. (Consett)
MacLaren, A.
Sorensen, R. W.


Chater, D.
MacMillan, M. (Western Isles)
Stephen, C.


Cluse, W. S.
Maxton, J.
Stokes, R. R.


Cooks, F. S.
Morgan, H. B. W. (Rochdate)
Viant, S. P.


Gallacher, W.
Morrison, R. C. (Tottenham, N.)
Wilson, C. H. (Attercliffe)


Hall, W. G. (Colne Valley)
Naylor, T. E.
Windsor, W. (Hull, C.)


Harvey, T. E.
Sexton, T. M.
TELLERS FOR THE NOES.—


Isaacs, G. A.
Smith, E. (Stoke)
Mr. Barnes and Mr. Woods.


Question, "That the Clause stand part of the Bill," put, and agreed to.

10.0 p.m.

Sir Herbert Williams: I beg to move, in page 13, line 43, at the end, to insert:
."(2) Goods shall not be deemed to be chargeable goods if they are sold for the purpose of being used as parts or materials for the repair or renewal of goods which are not chargeable goods.
The problem with which this Amendment seeks to deal seems to be clear. Spare parts ought not to be chargeable. T am told by those who have studied the Schedule that there are some doubts about the situation, and for that reason I move the Amendment and hope that the Chancellor will find it possible to accent it.

10.1 p.m.

Captain Crookshank: I am afraid that my right hon. Friend could not accept this Amendment. After all, the point at which the tax has to be paid is really when the goods pass from the wholesale stage to the retail stage, and at that stage it would be quite impossible to identify whether a particular article was being sold for use as parts or materials for the repair or renewal of goods which are not chargeable. To give a very simple illustration, which I think my right hon. Friend has already given, that of children's garments, they are not chargeable, but the trousers or shirts might be repaired at some stage, and the mother might buy some tissue or fabric for the purpose. At the time when the tissue or fabric passes from wholesale to retail, by no stretch of imagination could it be known that a particular bit or a particular yard of that cloth was to be used by this woman for that purpose, and therefore that it should be exempt. I think this illustration shows the practical

difficulty of dealing with the problem from the point of view of the ultimate purchaser or user, as differentiated from the moment of time when it passes from wholesale to retail. In any case it is not a question of big things needing repair. Perhaps the hon. Member has not appreciated the change which has now been made in the Schedule as compared with the original Purchase Tax. There a great number of articles were to be taxed where frequently the question of renewal and spare parts might arise. But this Schedule deals more with domestic and household goods, where that situation does not very often arise. On practical grounds, and on reconsideration, I think it will be seen that it is not possible to accept the Amendment.

10.4 p.m.

Sir H. Williams: The right hon. and gallant Gentleman has convinced me that my Amendment as it stands goes too far, but he has not convinced me there is not a case to be made. Perhaps he will look at page 45 of the Bill, where it will be seen that amongst those things which are not chargeable are tramcars, omnibuses and char-a-bancs. There are not so many people who make vehicles of this kind. Is it suggested that I could buy a whole tramcar or a whole omnibus with no tax chargeable, but that if I wanted a new gear at some stage or another it is to be taxable? In many cases the municipalities and companies who run public service vehicles are bound to be involved in very considerable charges in buying for repair of vehicle; spare parts which quite obviously ought to be on the free list. The right hon. and gallant Gentleman has satisfied me that putting a patch on Willie's trousers should not come in my Amendment.

Captain Crookshank: In that case I think it will be covered by Clause 23, Sub-section (2), under which
A manufacturer who is not required by the preceding Sub-section to be registered under this Part of this Act shall be registered thereunder if he satisfies the Commissioners in the prescribed manner that he uses chargeable goods in substantial quantities as materials.
If it is a question of using large quantities for repairs by a large organisation it will probably come within that Sub-section.

Sir H. Williams: I agree that that may take us to a certain point, but materials as generally interpreted in the courts are not the same thing as manufactured spare parts. All I would ask is that that point should be looked into. I agree that the drafting of my Amendment is not satisfactory, but there is a point of substance in it and I would ask the Chancellor to look into the matter again.

Amendment, by leave, withdrawn.

10.7 p.m.

Sir H. Williams: I beg to move, in page 14, line 12, to leave out from "House," to "by," in line 13.
The purpose of this and the following Amendments in my name is simple. Under this Clause power is taken by the Treasury to issue lists which will enable the people concerned to decide what precise goods come under the general definition contained in the first and second columns of the Schedule. It is obvious that there are a great many items about which there may be doubt, and accordingly from time to time lists may-have to be issued. If the Treasury include in a list an article which many people think should be in column 1 and put it in column 2, or vice versa, and there is an article which most people think should be in column 2 but is put in column 1, the effect is to impose a charge. The House has been careful to make sure when charges are imposed on the subject that we should go through an elaborate procedure. As the Clause stands the Treasury have power to issue lists which may impose a tax which previously did not exist. The only control of this House is that of a Prayer, which is usually taken at 11 o'clock at night, and those who pray have to take elaborate precautions to make sure that there is a quorum present. If such a list were not operative unless the Government moved

an affirmative Resolution, it would then be the duty of the Government to see that there was a House, and the protection would be much greater than if the procedure was that laid down in the Clause. The effect of the Amendment is to substitute an affirmative Resolution for a Prayer. This is a matter which has often been argued on other Bills, but this is the first time it has been argued on a Bill which involves taxation, and the House ought to be careful before it surrenders to the Treasury power to impose a tax in circumstances in which the only possibility of protest is by means of a Prayer.

10.9 p.m.

Sir K. Wood: I appreciate the point which my hon. Friend has made. Under Sub-section (2) of Clause 19:
the Treasury may from time to time issue lists more particularly defining goods which are to be taken as failing within any class of goods specified in the Seventh Schedule.
The procedure suggested is a convenient one. It is convenient to the traders, and I think that on examination most Members will agree that it gives a full safeguard so far as Parliament is concerned. I propose also to see what I can do by way of accepting a further Amendment which appears in the name of my hon. Friend and other Members regarding a period of notice under Clause 20.
A full safeguard has already been incorporated in this Bill because we have laid it down that no alterations can be made without an affirmative Resolution of the House. Where we are merely closely defining the goods which are either in the first or second part of the Schedule, we cannot be expected to set forth, either in this Bill or in any other form, a list which would be subject to an affirmative Resolution. The Treasury are strictly charged by the terms of the Measure to see that the list they issue must particularly define only the goods which are to be taken as falling within any particular class of goods mentioned in the Schedule.
There are two safeguards. It is true that one may object to a particular form of Parliamentary procedure, but I think it is convenient in this respect, that it does ensure matters being brought before Parliament, and, of course, if there were anything obviously wrong Parliament could challenge the position. Secondly, if there were incorporated in a particular


list something that was quite obviously outside the definitions I am advised that there would be a remedy in the courts. I think hon. Members will see that it is impossible to make a long list of goods subject to an affirmative Resolution, but I am desirous of meeting my hon. Friend in the matter of giving due notice to trades concerned in changes proposed under the next Clause. In the Amendment to which I have referred my hon. Friend suggests a method by which due notice should be given to interested persons to enable them to make representations. While I do not want to see the period so long as four weeks I will consider what I can put down on the Report stage to meet my hon. Friend on that point. I suggest that if I do that it will amply meet the point he has in mind. Here we secure to Parliament a review of the list, and if there were an outrageous case there would be an opportunity of going to the courts.

10.13 p.m.

Sir H. Williams: I wish to thank the Chancellor of the Exchequer for what I call his "disorderly speech," because while we are considering Clause 19 he made a speech upon Clause 20, on which I have an Amendment to move, and I shall now know what to say. I must agree that the Chancellor has rather convinced me. The main reason for putting down this Amendment was to safeguard the future position. It is always dangerous when in a Finance Bill power is taken to impose a tax without going through the usual procedure, and in certain cases Clause 19 gives the Chancellor power to impose a tax without an affirmative Resolution. I thought that ought to be challenged in order that it may be put on record that this power is being given. This is the second time in our financial history that this power has been obtained. The first instance was in the Safeguarding of Industries Act. New organic chemicals were being produced at the rate of 100 a year, and lists had to be published, and it was obvious that something of this kind had to be done in that case. It is dangerous, and whenever it is desired to be done for a particular reason, the fact ought to be placed on record. Otherwise, a dangerous precedent may be created which, in the long run, we may very much regret. My hon.
Friends and myself put down the Amendment, not in the hope that it would be accepted, but to enter a caveat against the establishment of a dangerous precedent. Having listened to the statement of the Minister, I now beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

CLAUSE 20.—(Orders as to Purchase Tax.)

10.16 p.m.

Sir Reginald Clarry: I beg to move, in page 15, line 9, at the end, to insert:
Provided that before the Treasury gives a direction under this Section it shall publish notice of its intention to do so in the Board of Trade Journal, so that opportunity may be given to interested persons to make representations thereupon, and provided further that a direction shall not be given earlier than four weeks after the publication of notice.
In moving this Amendment, I shall say only one or two sentences. It is an attempt to legislate by negotiation and consent. The Chancellor has already indicated that he is prepared to consider the matter.

Amendment negatived.

10.17 p.m.

Sir H. Williams: I beg to move, in page 15, line 20, to leave out "either."
If hon. Members will read the Clause, they will see that it says:
An Order under this Section shall not have effect unless it is approved (either before, on, or after the specified date) by a resolution of the Commons House of Parliament.
The object of the Amendment is to prevent a Resolution having retrospective effect. Most hon. Members regard it as undesirable that this House should do anything with retrospective effect, because that is unfair to a great number of citizens. The Chancellor of the Exchequer may have established a case for retrospective action in this matter in order to prevent the evil of forestalling; nevertheless, this opportunity of retrospective legislation is very dangerous, and even if the Chancellor of the Exchequer convinces me that he is right in this case it is as well that things should be on record, because, once again, it is important that we should not create a dangerous precedent.

10.19 p.m.

The Solicitor-General: I have been asked to reply on this Amendment. The fact that the Chancellor of the Exchequer indicated that, between now and the Report stage, he would consider what he would do to achieve something on the lines of the Amendment which has just been negatived, is a good reason why it is essential, in this case, that legislation should be retrospective. Suppose an announcement is made to bring certain classes of goods within the purview of the tax. There has to be a period of delay. The suggestion in the Amendment we have just negatived was that it ran into four weeks. The Chancellor of the Exchequer having accepted the idea of the first Amendment to Clause 20, it is impossible for him to accept this Amendment.

10.20 p.m.

Sir H. Williams: I am grateful to the right hon. and learned Gentleman for what he has said, but, on the other hand, I would ask him to read the Import Duties Act, because under that Act when somebody applied to the Import Duties Advisory Committee for an increase in duty and the Import Duties Advisory Committee came to the conclusion that a prima facie case had been made out, their next stage was to tell the world that such and such an industry had applied for a higher rate of duty and they asked whether anybody had an objection. The sequel was that all the importers of foreign goods who had objections sent in their objections, and there was a lengthy procedure, consisting of an interchange of documents and sometimes conference, and that went on for many months. Ultimately, if the applicant made out a case for a higher rate of duty, they made out a report which went to the Treasury, and if they were convinced that the argument was right, as they always were, a report was ultimately published, an Order was issued, and in due course we had a Debate in this House and we confirmed the Order. All this might involve six months between the notice and when the higher rate of duty ever came into operation. Nobody ever presented the argument which we have heard from the right hon. and learned Gentleman that this is a new tax. As the forestallers may be more active, I have raised the issue. Having regard to the disorderly intimation of the Chancellor of the Exchequer on the previous Clause

that he will give serious consideration to the Amendment proposed by my hon. Friend the Member for Newport (Sir R. Clarry), I will not press this Amendment, but I hope that something will be done on the Report stage, and perhaps the right hon. and learned Gentleman will consult those whose names are attached to the Amendment in order that we can come to some agreement in the matter. I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Clause 21 ordered to stand part of the Bill.

CLAUSE 22.—(Person accountable for, and accruer of, tax.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

10.24 p.m.

Mr. R. C. Morrison: I wish to move that this Clause be deleted.

The Chairman: That is not an Amendment which can be moved. I thought the hon. Member knew that. If he wishes to oppose the Clause, he may do so.

Mr. Morrison: It occurred to me, Sir Dennis, that if there was a short discussion now, it would obviate a discussion later on with regard to the new Clause which stands in my name on page 114:
Tax chargeable in respect of any purchase shall become due at the time of the retail sale.
With your permission, Sir Dennis, I would only say that a large number of people hold the opinion, rightly or wrongly, that if we were to have a Clause of this kind, it would be simpler to have a stamp tax which would be placed on the articles at the time of sale by the retailer. That would have been much less objectionable, and it would not have been open to the fear, which many business people have, that between the imposition of this tax on the wholesaler and its reaching the customer, a great deal may be added to it. Also, as the Bill stands, the tax will have to be paid by the retailer, irrespective of whether the goods are sold or not. Many retailers will have in their shops seasonable goods on which the tax has been paid, but which, because they are unable to sell them during the season, they will have to


put away until the next year. That applies to such things as women's clothing and men's overcoats, which, if they are not sold before the end of the winter, are put away till the next winter, when they are brought out again as "new season's goods." Although I do not wish to argue the matter at length now, I think it is a pity that the Government did not pay more attention to exploring the possibilities of a simple Stamp Duty on sales.

Mr. Barnes: If your Ruling, Sir Dennis, is that we should make our contributions on this Clause, there are two points—

The Chairman: I do not wish to be misunderstood. If an hon. Member puts on the Order Paper a Motion to omit a Clause, it is a well-known procedure that that is not called as an Amendment.

Mr. Barnes: The Amendment was not handed in in the form in which it appears on the Paper. It has been split up into two sections.

The Chairman: I do not understand the hon. Member. Perhaps he is under some misapprehension. There is no Amendment down on this Clause. If this Clause is passed, it is true that the proposed new Clause of which the marginal note is
Time at which tax to be chargeable,
would be out of Order, because it would be contrary to something that we are passing in this Clause.

Mr. Barnes: That is what I am raising. I understood that it was put in originally as an Amendment. It appears on the Paper in two parts, as I have indicated. However, there is no value in stressing that point. I am merely taking this opportunity of submitting two points upon which I should like the Chancellor's comments. We have had no indication yet as to what the Government's attitude will be in regard to the operation of this tax in relation to the operation of the Prices of Goods Act. The Chancellor knows that under the Prices of Goods Act any increase, particularly in this range of goods, is very severely governed. Once or twice I have made the point that the retailer will be called upon here to find a considerable additional sum of capital for purchasing his stock. When

we talk in terms of one-third and one-sixth, we ought to take into consideration that there will be additional charges to go on those goods, above the amount of the tax imposed.
The second point that I want to put is the effect of Clause 22 and the proposed Amendment that my hon. Friend the Member for North Tottenham (Mr. R. C. Morrison) has raised on the export of goods. I observed in the "Manchester Guardian" a day or two ago a reference to the pledge which the late Chancellor of the Exchequer gave when the original Purchase Tax was introduced that he would take steps to safeguard the export market in these goods against any handicap of the tax. The Federation of British Industries have pointed out that in the Customs Regulations both in the United States of America and several of the Dominions the export price should be based on the market price of the same article in this country. Therefore if, with regard to the Purchase Tax, we impose the price at the wholesale end, I wonder whether that particular point will be met.
Everyone recognises to-day the additional importance of exports in relation to our war economy. I am not interested in that angle of the problem, but the broad problem of exports does appeal to me. It is a point of some importance, and I have not yet noticed any reply. If the tax is to affect exports, then the Treasury ought seriously to consider the Amendment implied in these suggestions.

10.32 p.m.

Mr. Glenvil Hall: I would like the Chancellor of the Exchequer to be good enough to explain the Clause to us before we attempt to pass it. In addition to the questions already asked by my hon. Friends, there are one or two questions that I would like to put to the Chancellor of the Exchequer. I will take the simple illustration of books. It says in the Bill:
Tax chargeable in respect of any goods shall become due…on the delivery of the goods.
I take it that it means the delivery of goods from wholesaler to retailer, and that in the case of books, it will be the bookseller. The Chancellor of the Exchequer, who is a great reader of books and has a great library himself, must know from his own experience that booksellers frequently have certain books on their shelves for a large number of years.
It may be that this war may not last for eternity, and there will come a time when these books will still be on the shelves, and he will have obtained the Purchase Tax on them. By that time I assume that the tax will have come to an end. What provision does he provide for that bookseller to recoup himself for the Purchase Tax he has paid to the wholesaler, and which he will not be able to get from the persons to whom he sells the books? There is the case of remainders. As the Chancellor of the Exchequer knows, the book trade is a peculiar market. I use the book trade as an example, but this difficulty arises in other directions. Sometimes a book does not go too well, and a large proportion of the edition is left on the hands of either the publisher or the middleman, who has perhaps bought up the books at a cut price and puts them on the market. Is the price of the wholesaler the full price, or has some other figure to be discovered and passed on to the consumer?
Those are some of the queries that arise in my mind and I would be very glad if the Chancellor of the Exchequer could find it in his heart to explain to us, quite briefly, how this tax can be passed on in the way suggested in the Clause we are now debating.

10.35 p.m.

Captain Crookshank: I do not want to repeat myself so I will say to the hon. Member for East Ham, South (Mr. Barnes) who said he was interested in the export trade problem, that I dealt with this question at considerable length on Tuesday, as he will see in column 164 of the OFFICIAL REPORT—

Mr. Woods: That statement left it that negotiations were proceeding. There is no guarantee that we shall have a satisfactory arrangement. It is left in the air.

Captain Crookshank: I said that representations of a suitable sort were being made. Things move quickly in these days but I cannot say that they move as fast as the hon. Member seems to suggest. The second point the hon. Member for East Ham, South, raised was the position in relation to the Prices of Goods Act. Here again, I made a considered statement, on the advice of the President of the Board of Trade, on 25th July, as will be seen in column 1057 of the OFFICIAL

REPORT.I will not repeat that either, but if the hon. Member thinks the statement was not sufficient perhaps he will let me know privately. Perhaps the hon. Gentleman was so busy preparing his speeches for this occasion that he was not able to be here on that occasion.
The hon. Member for Colne Valley (Mr. Glenvil Hall) asked for an explanation of what the Clause does. It describes, first of all, the person who is accountable for the tax—in Sub-section (1) in very big letters—and, secondly, when the tax chargeable is due—in Sub-section (2) in equally big letters. The person chargeable is, in ordinary language, the registered person who is selling the goods. That is the person who will have to pay to the Exchequer. The tax itself is due on delivery of those goods under purchase. The value of the goods upon which the tax will be assessed is the value of the goods at the date of the delivery. These are the essential points—value, date and the person accountable.
The two hon. Members who wanted this Clause removed suggested an entirely different plan. They wanted the tax to become due at the time of the retail sale, but that is a suggestion which is, of course, completely impracticable. The wholesaler selling goods to the retailer expects payment of his account within some sort of limited period. How in the world can he know when to collect the tax from the retailer, because the retailer, having got the goods from the wholesaler does not sell them all in a day. Indeed, the hon. Member for Colne Valley was worried about the retailer ever selling his goods. The wholesaler will not know whether the retailer's goods are sold or not. The suggestion is so impracticable that I have a suspicion that it is a wrecking proposal because hon. Members are not in favour of the tax.

Mr. Glenvil Hall: What the right hon. and gallant Gentleman is saying, in essence, is that you are going to tax a purchase which in fact may never be made.

Captain Crookshank: No. The purchase is all right—purchase by the retailer from the wholesaler. What happens to it afterwards, whether it is sold or left in the library till the war is over, is another matter. It is the actual moment of sale when it passes out of the hands


of the wholesaler for a consideration to the retailer.

10.41 p.m.

Sir Joseph Nail: There are two distinct issues and it is unfortunate that one of them should have been pressed so strongly. One issue that is important is that of the export trade. That ought to be settled before the tax is finally carried through. The other matter, of the retailer having to buy goods and stock them against future sale, has been over-argued and over-stated. The difficulty which is distressing a lot of retail shopkeepers is that the precedent is there. Sugar goods, tobacco, liquors, petrol, oil—all these things are taxed before distribution. Every grocer, toffee-shop keeper, tobacconist and confectioner has to carry a stock which is duty paid, and the position of booksellers and those who, in future, stock goods which under this provision will be duty paid, will be no different from the grocers, tobacconists and wine-sellers. There is nothing in that. That point ought to be stressed in order to disabuse the minds of a good many retailers who are being made to think they are being subjected to something quite new, whereas the principle contained in the Bill is strictly in accord with precedent and causes no trouble to the trades already concerned.

10.43 p.m.

Mr. Woods: I should not have intervened but for the suggestion that my hon. Friend had introduced a wrecking proposal in seeking to omit the Clause. The articles mentioned by the last speaker are not in any sense in the same category as the articles which will be covered by the Purchase Tax. [Interruption.] The hon. Member has his experience. Some of us have had ours. Directly you come to dry goods, the drapery section, especially fancy goods, which are all carrying a high rate, there a considerable percentage of the purchases have to be sold at sale prices. There is a considerable volume of sales in which goods under this scheme will actually have to be sold over the counter at a smaller figure than has been paid by the retail buyer. The tax will not be covered by the sale in a number of commodities. This is different from the routine business of buying so many packets of cigarettes and so forth.
Some of us are concerned about the day when the tax will end. We are hope

ful that we shall arrive at the stage when taxation will be direct and there will be an opportunity for some future generation of British people to say that the present system is iniquitous and to bring it to an end. Difficult as may be the starting of the tax, there will be a much stronger argument for continuing it, once it is there, because of the difficulties of ending it. Many shopkeepers will be left with stocks on which they have paid the tax, and those who start de novo and get new stocks, without the tax, will be in an advantageous position. One of the reasons for considering the proposal to leave out the Clause is that it would hold out some hope of ending the tax expeditiously and in a manner that would be equitable.

Clauses 23 to 26 ordered to stand part of the Bill.

CLAUSE 27.—(Sums charged by reference to tax to be stated in invoices, etc.)

10.46 p.m.

Sir H. Williams: I beg to move, in page 20, line 38, to leave out from "shall," to the end of the Clause, and to add:
add to any invoice or similar document delivered by him to the buyer a statement indicating the amount due from the buyer to the seller by reference to tax for which the seller may be accountable in respect of the purchase.
This Clause is a machinery Clause, the primary purpose of which is to make sure that there is no dishonesty. No principle is involved in the Amendment, which deals with a question of drafting and accountancy merely for the purpose of making it rather easier for traders to carry out what the Government desire. I hope that the Chancellor and his advisers have looked carefully at the Amendment, and that they will consider that there is a case for my drafting as compared with the drafting of the Bill.

10.47 p.m.

Mr. Levy: I hope the Chancellor will accept this Amendment, which would have a material effect with regard to the Board of Trade. When the Board of Trade are dealing with restrictions on price, it will be appreciated at once that the restrictions will be greater if the tax is added to the price, whereas if the


price is by itself and the tax a separate matter, it will have a material effect not only on the home restrictions, but on the export trade.

10.48 p.m.

Sir K. Wood: I think the Amendment might be an improvement on the Clause, and I should be prepared to accept it, although I must say to my hon. Friend that I know the point he has in mind, and he must not be too confident in that respect.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

Remaining Clauses ordered to stand part of the Bill.

The Chairman: The hon. Member for North Camberwell (Mr. Ammon) has two proposed new Clauses on the Paper. The first deals with "Exemptions for Civil Defence functions of local authorities" and the second with "Exemption for local authorities." The hon. Member can choose which one he will move; but, no doubt, he will be able to discuss them both.

Mr. Ammon: With your leave, Sir Dennis, I propose to move the second new Clause on the Paper because it covers a rather wider field than the first.

NEW CLAUSE.—(Exemption for local authorities.)

The provisions of this Part of this Act shall not apply to chargeable goods bought under chargeable purchases by any local authority.

In this Section the expression "local authority" means the council of a county, county borough, county district or metropolitan borough or the Common Council of the City of London.—[Mr. Ammon.]

Brought up, and read the First time.

10.52 p.m.

Mr. Ammon: I beg to move, "That the Clause be read a Second time."
This new Clause is moved on behalf of the local authorities because the Bill does impose an additional burden on the ratepayers and it is a burden which has been brought about largely by the amount of social legislation passed in recent years. This adds considerably to the expenditure of local authorities on various commodities in clothing, food and so forth. In addition to the ordinary chargeable goods which they buy and for which they pay tax, this will mean an additional

burden as far as the ratepayers themselves are concerned. I would remind the Chancellor that it will not have the effect of reducing expenditure. To give an idea of what is involved—and here I speak for an authority with which I am most intimately concerned although to a greater or to a lesser extent it concerns all local authorities—I might say that as far as London is concerned, it means an addition of a 2d. rate. That was worked out some little while ago, but we have been moving so rapidly that additional burdens have been thrown on local authorities since then by the influx of alien refugees and other people who are an additional charge. The provision of housing accommodation, food, etc., has added an increased burden on the local rates. It means that the figure of 2d. on the rates in London is brought a little higher.
I ask the Committee to consider what it means. In London we have to buy no fewer than 6,000 beds, with the necessary bedding every year. That will now be considerably increased by the guests we have had coming here. In addition, we have to clothe no fewer than 150,000 persons with uniforms of one sort or another—firemen, nurses, park-keepers and attendants. Something like £300,000 a year has to be spent on drugs, medicine and equipment for hospitals. Then there is the difficulty of getting in the rates. Every local authority must have had experience of that difficulty. It indicates the tremendously heavy burden on the people which they are finding it more and more difficult to bear.
I speak as one who, unfortunately, has to take the chair at an Assessment Appeal Committee and I am alarmed at the growing queue of those who cannot pay their rates. By recent legislation it is possible for them to be excused. That can only go on to a certain extent, for there is a danger that local authorities may be faced with bankruptcy. Every additional burden makes that probability more imminent. Surely this is a matter that could be spread more evenly, and the Government could well get the required money from direct taxation. I hope that the Chancellor will meet the difficulty which confronts local authorities. It is no trifle. It means in London an additional £500,000 a year on the rates. That amount was calculated before the other items to which I have referred were put in,


so that the amount is now considerably more. Every local authority in the provinces will also be faced with this burden, and I submit that there is an unanswerable case for some relief.

10.57 p.m.

Sir J. Lamb: The hon. Member has spoken largely from the London point of view, but this burden affects every county. It may not involve so much to the rates as appears on the face of it, because the bulk of the expenditure concerned is grant-aided. Consequently, the Government will be paying some of the taxes they themselves are imposing. Members with experience of local authorities know of the difficulty which councils are having to bring their finances into anything like order, and almost every council in the distressed areas will want relief.

10.58 p.m.

Sir K. Wood: My hon. Friend's last reference is not unknown to me, because for many years when I was Minister of Health that was always the state of local authorities. I had to address myself to the proposal in the new Clause, and much as I appreciate the difficulties of some local authorities, I must maintain the principle of this tax; that is, that the chargeable goods are always taxable except when bought by a registered manufacturer for manufacturing purposes or by wholesale merchants for purposes of retail. I have only to stress what I said when we were discussing the general implications of the tax. I want the Committee to see what would happen if I began to exempt certain bodies and made them free from the tax. Once we accept the principle of certain privileged buyers, it is difficult to see where we can draw the line. If I accepted the principle which has been submitted by my hon. Friend that local authorities should be privileged buyers, I should have to accept the principle for their hospitals. If I excepted their hospitals, I should be driven to except voluntary hospitals. Having done that, I should be driven to except other institutions like nursing homes. Then, if I gave exemption to the schools of local authorities, I must in equity exempt public schools. I must then also exempt the private preparatory schools and other educational institutions.
Directly I get on this downward course I am also driven to exempt similar goods

purchased by parents for the education of their children. In these circumstances I think the Committee will realise that it is quite impossible for me to accept the Clause. As my hon. Friend the Member for Stone (Sir J. Lamb) said, the State is to-day assisting these local services, and we have to face the fact that the increase in costs will mean an increase in the assistance which the Exchequer will have to give; but I must say that I regard that as in every way preferable to a policy of exempting institutions because they are State-aided, with all the consequences which follow. I hope my hon. Friends will realise that it is my duty to maintain this tax over this very considerable area, and that local authorities will realise that in this way they will be making their contribution to the money which I hope to secure for the national effort.

11.2 p.m.

Mr. Douglas: The Chancellor of the Exchequer has made a forceful speech against this proposed new Clause on two grounds. The first is that it affects the principle of the Bill, and the second is that it would open the way to other proposals for exemption from the tax. With regard to the second point, I am sure that the Chancellor is able to draw a clear and firm distinction between a local authority and any other body. Local authorities are part of the administrative system of this country, and just as it is against the public interest that the purchases of the central Government should be taxed, so it is against the public interest that the purchases of local authorities should be taxed. Their institutions are in a totally different position from institutions which may be carried on for private profit or even for charitable purposes. This is a tax which is imposed by the State upon one of its own Departments.
As regard the Chancellor's argument that this Clause would affect the general plan and purpose of the Bill, let me remind the Committee that the Chancellor and his predecessor laid down the general principle that public utility services such as those which supply gas, water and electricity should not be subject to taxation. If the general principle is sound that these public services ought to be exempted, then the means by which local authorities provide those services ought also to be exempted. The right


hon. Gentleman and his predecessor laid it down that the materials of industry ought not to be taxed, but here we have a tax upon the materials which local authorities have to use in performing those public services.
Lastly, the tax, in its application to local authorities, has no relationship whatsoever with restricting consumption. I believe that the local authorities generally, have been trying their hardest to restrict their expenditure to the narrowest possible scope. The tax will not cause them further to restrict their expenditure to an appreciable extent. It will merely add to the cost of the public services, which cost will fall on the ratepayers. It will become a double indirect tax, which will not achieve the purposes which ought to be served by taxation. It will become extremely repressive and unfair in its incidence and will burden the poorest members of the community to a very great extent.

11.6 p.m.

Mr. G. Strauss: Is the tax payable on goods bought by the Government for hospitals? The Chancellor said that if the London hospitals were exempt the others would be, too.

Sir K. Wood: That was in relation to book-entry transactions. It is a different matter.

Mr. Strauss: Really, I cannot see the logic in the argument. The right hon. Gentleman said that he could not possibly make an exception in the case of local authorities buying goods for voluntary hospitals, because it would mean that nursing homes and other institutions would have to be exempted. Let him take the matter the other way and say that because the Government hospitals are exempt, those who are being treated in the London hospitals are exempt, too. Therefore the hospitals which are treating civilian casualties of war should be exempt. That argument is very poor and I hope that the right hon. Gentleman will give the matter further consideration. This tax is being put on to the ratepayers. I can see no technical reason why councils should not be exempt from the tax, which should go on to taxpayers and not on to ratepayers. The logic of the argument of the right hon. Gentleman does not bear a moment's consideration.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Exemption for hospitals.)

(1) Goods purchased on the order and for the use of a hospital are not chargeable goods for the purposes of this Part of this Act.

(2) In this Section "hospital" means an institution (not being an institution carried on for profit) which provides medical or surgical treatment for in-patients.—[Mr. Storey.]

Brought up, and read the First time.

11.8 p.m.

Mr. Storey: I beg to move, "That the Clause be read a Second time."
I move this new Clause with the support of the British Hospitals Association, the King Edward's Hospital Fund and the Nuffield Provincial Hospitals Trust. To justify the acceptance of the new Clause, particularly in view of what the Chancellor has already said, I must show that the achieving of the purpose of the Purchase Tax, the raising of revenue and the restriction of consumption, by its application to goods for the use of hospitals, would be contrary to the public interest. I cannot believe that the Chancellor can wish to raise revenue by appropriating a substantial part of the voluntary subscriptions which are given to the hospitals for the treatment of the sick poor. Nor could I believe that he wishes to appropriate a substantial proportion of the voluntary contributions of those who wish to pay something towards the cost of their treatment, particularly when those contributions, in the majority of cases, are based on the patient's means rather than on the cost to the hospital.
If we can agree that revenue should not be raised at the expense of the sick poor or sick persons who can only afford to pay something towards the cost of their treatment, we are left with three other categories of patients from whom revenue can be obtained: those who can afford to pay the whole cost of their treatment, those whose treatment is paid for out of the rates, and those whose treatment is paid for out of national funds—and that is a category which may become a huge one if air bombardment reaches the proportions for which we are prepared. About those who can afford to pay the whole cost of the treatment—and it is not a large class—I would only say that the time when a man is sick is not the time to extract additional contributions to


wards the revenue from him, while to increase the charge upon ratepayers by a tax upon purchases for local authority hospitals is only to transfer the raising of revenue from the taxpayer to the ratepayer. There remain, therefore, only those whose treatment is paid for out of national funds, and here an attempt to raise revenue by a Purchase Tax upon goods for hospitals would fail, because it would merely be transferring money from one of the Chancellor's pockets to the other.
I turn next to the second purpose of the Purchase Tax, the restriction of consumption. I submit that the proposed charge upon goods for hospitals cannot be sustained. Hospitals, particularly the voluntary hospitals, are of necessity economically-run units. All purchases are used in the essential public service of alleviating sickness. To restrict that service would be a disservice to the State. Ill-health at any time is wasteful, and at a time when all the energy that the country possesses is needed for the prosecution of the war, to restrict the alleviation of sickness is the worst kind of folly. I hope I have shown that both for raising revenue and for restriction of consumption the Purchase Tax on goods for use in hospitals fails. Indeed, such a tax would be disastrous. All the hospitals are suffering from rising prices, a process which is likely to be intensified, and voluntary hospitals are having the gravest difficulty in maintaining their income on account of the heavy strain of taxation upon subscribers. Their continued failure to balance revenue with expenditure can have only one result—curtailment of the services which they give to the sick. Unless the health of the people is to suffer, such a curtailment must be made good out of public funds, and a consequent charge upon public funds might well exceed any revenue gained from the tax.
There is another question which I must answer. Is the exemption a practical one? I submit that it is. In Canada, where they have a consumption or sales tax of 8 per cent, on the sales price of goods, articles and materials which are for use in bona fide hospitals are exempt and have been since 1931. During past months Canadian hospitals have feared that on account of the urgent need for revenue

the privilege might not be continued, but in a recent Budget the Canadian Government have decided that even in the financial emergency at present existing the work of hospitals must not be hampered. What Canada can do I submit that we in this country can also do. On the actual wording of the Clause, I would only say that it follows the example of the Canadian provision exempting goods purchased on the order, and for the use, of hospitals; and the definition of a hospital follows the definition which has been accepted and found practicable under the Road and Rail Traffic Act, 1936.
I conclude with a special plea for the voluntary hospitals. The Clause will exempt both voluntary and local authority hospitals. It is right that it should do so, not only for the reasons I have already stated, but also because there should be no differentiation between them at a time when, through the Nuffield Hospitals Trust, and through their co-operation in the Emergency Medical Service, there is a greater realisation on both sides of the part which each can play in building up a nation-wide hospital service. But, for the voluntary hospitals, the exemption is a much more vital thing. The existence of the voluntary hospitals system is at stake. If anyone should ask, "Is the voluntary system worth saving?" I answer confidently that it is. If anyone wants to see the reasons, he will see them fully stated in the report of the Cave Commission of 1931. There they will find why on financial grounds, on account of the welfare of the sick, the training of the medical profession, the progress of medical research, and the value of the care and time expended in voluntary management and support, the Commissioners were led to conclude their report with these striking remarks:
The voluntary hospitals system, which is peculiar to the English-speaking race, is part of the heritage of our generation, and it would be lamentable if, by our apathy and our folly, it was suffered to fall into ruin.
I know that the Chancellor, with his great experience as Minister of Health of the hospital services of our country, and in view of the striking lesson which he has had in recent months of the value of voluntary effort through the National Savings Movement, would not be guilty of such apathy and folly, and I ask him to reconsider this plea for the hospitals of our country.

11.18 p.m.

Captain Ellisron: I want to say a few words in support of this Clause. I feel that there is no one in this House with such a lack of responsibility that he would ask concessions from the Chancellor at this time unless he was convinced that he had an unanswerable case. All who have any experience of the hospitals of the country know that most of those institutions are bordering on insolvency. One has only to read the local newspapers to see the same story from all parts of the country. The boards of management are absolutely at their wits ends at the present time to maintain those institutions. We believe that this Purchase Tax, superimposed on their other burdens, is in real danger of proving to be the last straw which will break the camel's back. On those grounds, we make this strong plea to the Chancellor to reconsider his avowed intention to harden his heart against all appeals that are being addressed to him. This proposed tax comes at a most unfortunate time, when there was some prospect of the scheme of the Nuffield Hospitals Trust, securing co-ordination between the voluntary and the municipal hospitals, and putting the hospitals on a sound financial basis. We cannot forget that it is the voluntary and municipal hospitals of this country that provided the medical schools where were trained the generations of medical men who built up the reputation of British medicine.
Is it right that these institutions should be placed in such a position that their very existence is threatened? We know what the effect must be upon every hospital authority. Speakers have already told us of the expenditure of the London County Council. I believe that the drug bill alone of the London County Council hospitals is something like £280,000 a year, and you are going to increase that amount by something like £45,000 represented by the Purchase Tax. I know as a Member from Lancashire that that will apply with equal force in the great hospital schemes in Liverpool, and Manchester and throughout the county of Lancaster. They are to have this extra burden imposed upon them at a time when the position is extraordinarily difficult. Everything that can be said about drugs applies equally to the various expenses for appliances and equipment necessary for a modern hospital. The

Financial Secretary told us the other day that there is no intention to impose the Purchase Tax on spectacles or lenses. I rejoiced when I heard that, as it was the concession of a principle. Physical disability and sickness are not proper things for taxation, and if it is right that spectacles and lenses should be relieved of the tax, it is also right that the equipment for the modern treatment of diseases should also be freed from taxation.
The hon. Member for Sunderland (Mr. Storey) told us that Canada has given the Chancellor of the Exchequer a precedent which might justify him in exempting hospitals from this burden. It cannot be denied that the hospitals are an essential part of the health services of this country. The Lord President of the Council, when he was Chancellor of the Exchequer and was hard driven to enforce economies, told us every time that, whatever we had to cut and save, there should be no reduction in the essential health and social services of the country. We contend that hospitals are vital to the wellbeing of the community, and at this time when we are driven to every possible resort to secure the necessary funds for victory, the national interest demands that we should maintain the health services intact so that the people may be assisted to face any hardships that may be imposed upon them by the war. No one knows better than the Chancellor of the Exchequer—who gave such outstanding service when at the Ministry of Health—the very great contribution that hospitals make to the maintenance of our national health. Therefore, in spite of his urgent need of revenue and his determination, which we all share, to secure all the funds necessary for the successful prosecution of the war, we appeal to him with confidence to avoid making the position of these charitable and municipal institutions more difficult than it is at present.

11.25 p.m.

Sir K. Wood: My hon. Friends have made strong and powerful speeches, and were it not for the fact that I felt that I had a good case in reply to them I would have accepted the new Clause. But I do not think they realise the extent to which we have already gone to meet the hospitals. In the first place, ordinary medicines and drugs are taxable at reduced rates and expensive medicines— which are a considerable matter for


hospitals in the country—are to be free of tax. Medical and surgical instruments are exempt, as also is the specialised hollow-ware which is used by hospitals. Hospital equipment such as dentists' chairs, operating tables, special furniture, clinical thermometers, surgical glassware and surgical bandages are exempt. The taxable goods of a hospital represent less than 10 per cent, of their annual expenditure, and I do not think it would be unreasonable, in the circumstances of to-day, to ask hospitals to make this Contribution. My hon. Friends will appreciate that if hospitals are exempt, orphanages, and other such institutions, must also be exempt. I suggest to my hon. Friends that, having made their case, they should not press the clause further to-night, but regard the contribution we are asking from hospitals as something which will undoubtedly help us to achieve the object we have in view at the present time.

11.28 p.m.

Sir J. Lamb: May I ask whether this will exclude the calling of my Amendment to the Seventh Schedule, in page 44, line 14, which deals with this particular point?

The Chairman: That is quite a different point.

Sir J. Lamb: But it deals with the same matter. If the Amendment will be called then, I will reserve my remarks until later.

The Chairman: I can give the hon. Member no such assurance.

Sir J. Lamb: In that case I must safeguard myself by asking a question. The Chancellor mentioned that expensive drugs are to be excluded. What is an expensive drug? You may get a cheap drug which is used for a long time at great expense.

The Chairman: Now I think the hon. Gentleman is anticipating the Schedule.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Exemptions for registered war charities.)

The provisions of this part of this Act shall not apply to chargeable goods brought under chargeble purchases by any registered war charity.—[Mr. Robertson.]

Brought up, and read the First time.

11.31 p.m.

Mr. Robertson: I beg to move, "That the Clause be read a Second time."
I move this in spite of the admittedly great need for raising money. Throughout the country there are war comforts organisations knitting for sailors, soldiers and airmen and supplying them with books and games, and great good is being done by communities supplying the troops from their own neighbourhood. Pennies are being collected from humble people who gladly contribute for this good cause, and undoubtedly the troops appreciate these gifts. When our men came back from Dunkirk these organisations played a great part, and throughout the country, at lonely stations where our men are, the receipt of these much-needed woollen articles, books and games does great good. It conveys to the men that they are being thought of by the people at home. I feel that harm will result to the collections for these objects if registered war charities, which are making these gifts gratuitously, are penalised by having to pay this impost.

11.33 p.m.

Mr. Levy: Where charities buy goods from traders with the object of making gifts to these charitable institutions, it seems wrong that a tax should be charged, and it would restrict their ability to provide a sufficient amount of goods because they cannot spend more than the sum voluntarily subscribed. It seems a pity that the Services should be deprived of the extra comforts which would be acquired with the money so subscribed if tax had to be paid on the goods purchased. Since it is here a question of bona fide charities, which do not re-sell the goods which they purchase, but make an absolute gift of them to the Services, I hope the Chancellor will agree to this new Clause.

11.35 p.m.

Sir H. Williams: I wish to support the new Clause. On this matter I am subjected to a certain amount of domestic pressure, since my wife happens to be the vice-chairman of the Frances Day Fund for providing games for the troops. If this new Clause is not accepted, the effective work of this charity—which is not yet a registered war charity, for reasons which I will explain in a moment —will be cut down by one-quarter. If


the new Clause is not accepted, the money contributed to that charity will go only 75 per cent, of the distance which it now goes. The charity gives playing cards, dartboards, and so on, to the troops. I believe it has supplied every prison camp in Germany where our men are with a certain amount of amusement to relieve the tedium of their lives. It is incredible that the Committee should solemnly impose a tax which would take away 25 per cent, of the contributions which people make to a charity of this kind.
I have said that it is not a registered war charity. There are, indeed, no registered war charities, because the Government Department concerned with this matter since the Act was passed has not yet printed the forms to enable people to make applications. I hope the Chancellor and the Financial Secretary, who have to supervise all Government Departments, will tell them to get on with this matter, so that charities can be registered, with the consequent elimination of the risk of there being war charities which are not properly run. It seems to me that it would be a very harsh thing to say-to even- person who gives £1 to one of these war charities, which are run almost entirely by voluntary workers and the overhead expenses of which are small, that 25 per cent, will be taken away in taxation, and to that extent the effectiveness of the work of these charities be diminished. When the men are stationed in isolated places, facilities for recreation among themselves contribute very much to their morale. It is difficult to interpret the Schedule. Some people may be knitting comforts and buying fabrics the price of which will be raised by this tax. I beg the Chancellor to give some consideration to this new Clause, because he will affront public sentiment if he taxes the money which people contribute for the purpose of bringing comforts and cheerfulness to those serving in the Forces.

11.39 p.m.

Captain Crookshank: I am afraid that, in spite of the eloquent appeals which we have heard, we must consider this new Clause as one more attempt to get us on to the slippery slope. My right hon. Friend does not feel that he can accept the new Clause. The hon. Member for

Streatham (Mr. Robertson) said that throughout the country there are small charities which provide comforts for the troops. My experience of most of these charities is that what they collect and send out to the troops are mostly, although, of course, not entirely, either "smokes" or woollen goods which have been knitted at sewing parties.
To the extent that that is the chief way in which they spend the money connected for the assistance of the troops neither of these categories comes within the tax. Tobacco is exempted and, of course, wool, which the women use to make socks, scarves, mufflers and the rest of it. With regard to the other comforts, I would say that probably the great bulk of the charities which buy these things, in fact buy them from retail shops.

Sir H. Williams: No.

Captain Crookshank: The hon. Gentleman always has the most up-to-date statistics but I was following the hon. Member for Streatham who spoke about small charities throughout the country and taking my own constituency as an example, I do not retract the statement that they buy these things in retail shops. We go back to the principle of the tax which I have discussed earlier. The tax arises at the moment when the goods pass from the wholesaler to the retailer and it would be impossible, under any kind of administration, in the case of a tax of this nature, to make an exemption when the article is eventually sold by the retailer. At that stage it is impossible to "unscramble" the tax. The hon. Member will agree that the great bulk of these most deserving charities, to which I hope all hon. Members subscribe and will continue to subscribe, deal with goods not within the scope of the Purchase Tax. I think it will be realised that my right hon. Friend is not, therefore, so harsh as might appear.

11.42 p.m.

Sir H. Williams: I really must protest. My right hon. and gallant Friend's speech had not the faintest relevance to the new Clause, which says:
The provisions of this part of this Act shall not apply to chargeable goods brought under chargeable purchases by any registered war charity.
He first tells us that the tax does not


apply to "smokes" and does not apply to wool. That has nothing to do with the argument. What is relevant is what is in the Bill, and what is not in the Bill is not relevant. He says that a lot of these things are bought from the retailer; but this new Clause does not apply to that. It applies only to
chargeable goods bought under chargeable purchases by any registered war charity.
That is to say, when the goods are bought wholesale by a registered war charity. Therefore, the whole of my right hon. and gallant Friend's speech had no relevance of any kind to the new Clause. It is when a war charity goes direct to a manufacturer or wholesaler. Whether the retailer subsequently sells them or gives them away, has nothing to do with him. Therefore, there is not one word in the brief on which my right hon. and gallant Friend based his speech—composed by the most intelligent people who have to advise the Chancellor of the Exchequer and the Financial Secretary to the Treasury—which has the faintest relevance to the proposed new Clause which we are now discussing. I beg the right hon. Gentleman and the Financial Secretary to reconsider the matter, because they have opposed the Clause for reasons which have nothing to do with the words in the Clause.

Captain Crookshank: I was really answering the speech made on the new Clause by the hon. Member for Streatham.

Sir H. Williams: I think the duty of a Minister is not to answer speeches but to

answer the proposals placed before the House of Commons. Because my hon. Friend the Member for Streatham made a speech which, with all due respect to him, I assumed was not too much in order on the Clause, that it is not the slightest reason for a Minister of the Crown or the right hon. and gallant Gentleman to make a speech which was prepared beforehand. We all know how Budget Debates in the old days were conducted. There was plenty of paper then and they used to print the speeches but now they type them. I ask the right hon. Gentleman to reconsider this matter, because it is not good enough to refuse a new Clause for reasons which have not the faintest relation to the proposal.

Question, "That the Clause be read a Second time," put, and negatived.

Schedules 1 to 6 agreed to.

Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to—[Mr. Munro.]

Committee report Progress; to sit again upon Tuesday next.

The remaining Orders were read, and postponed.

It being after Half-past Eleven of the Clock, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order, until Tuesday next, pursuant to the Resolution of the House this day.

Adjourned at Thirteen Minutes before Twelve o'Clock.